Investor Steve Eisman is raising concerns about the artificial intelligence industry. He says its growth relies too much on two companies.
Eisman gained fame for betting against the housing market before the 2008 financial crisis. That story was told in the book and movie "The Big Short."
On CNBC's Fast Money, Eisman said OpenAI and Anthropic now drive most of the AI revenue at major tech companies.
He estimated the two startups account for about 70% of AI related revenue at Microsoft, Amazon, Google and Oracle.
Eisman also said OpenAI and Anthropic make up between 25% and 35% of cloud revenue at those same companies.
The Risk From China
Eisman pointed to China as a possible threat to this setup. He said Chinese open source AI models are much cheaper to use.
He warned these models are gaining market share. If that trend continues, it could lead to a price war across the AI industry.
"The Achilles' heel of this whole story is if something bad happens to Anthropic and OpenAI," Eisman said. He added that cheaper Chinese models could take share quickly.
Eisman said this shift is already happening, based on what he has heard from people in the industry.
A Growing Debate On Wall Street
Eisman is not alone in questioning the AI spending boom. Michael Burry, another investor known for his bet against housing before the crash, has voiced similar doubts.
Burry has asked whether real customer demand supports current AI spending levels. He argues that some of the demand comes from circular financial arrangements between companies.
Circular arrangements happen when companies invest in each other or strike deals that boost reported revenue without new outside customers.
Burry has placed bearish bets against companies tied to the AI boom. Nvidia is one of the firms he has bet against.
He has also placed bets against other companies in the semiconductor sector. Burry believes the market may be near a top.
Both investors built their reputations on predicting the 2008 housing crash. Their comments have added to the debate over whether AI spending will pay off.
For now, OpenAI and Anthropic remain private companies. Their success or failure could still affect the stock prices of the major tech firms tied to their growth.
