Steve Eisman warns of AI boom vulnerability

Investor Steve Eisman has warned that the current artificial intelligence boom carries a significant hidden vulnerability, as the investment thesis relies heavily on the success of just two private companies: OpenAI and Anthropic.

Eisman noted that these two startups account for approximately 70% of AI-related revenue for major technology firms including Microsoft, Amazon, Alphabet, and Oracle. Furthermore, they represent between 25% and 35% of the total cloud revenue for these giants. He characterized the future of these massive corporations as a bet on the continued success of OpenAI and Anthropic.

A primary threat to this model is the rise of cheaper, open-source, and open-weight AI models from China. Eisman warned that if Chinese models gain significant market share due to their lower costs, it could trigger a damaging price war. Such a conflict would undermine the financial logic behind the massive capital expenditures currently being made by hyperscalers to support AI workloads.