Will Data Centers Be the Next Big Short?

A few weeks ago, the famed investor Steve Eisman warned that the companies driving the AI boom were using the same financial shenanigans that once brought down Enron in what is still regarded as one of the greatest financial frauds ever. Eisman has credibility when it comes to anticipating economic disasters. As one of the handful of investors who saw the 2008 financial crisis coming, he made an estimated $1 billion betting that the market would collapse. In Michael Lewis’s book The Big Short, and the subsequent movie, Eisman is one of the heroes.

Eisman now has a popular Substack as well as a YouTube channel with some 224,000 subscribers. “What I find disturbing is some of the off-balance-sheet financing [vehicles] I thought had gone the way of the dodo bird after the Enron and post-GFC (Great Financial Crisis) debacles,” he told his viewers last month. “Are we going to do this all over again?”

Michael Burry is another hero of The Big Short. An early AI bear, he closed his hedge fund last November because his bearish views were not, as he acknowledged at the time, “in sync with the market.” He has since started a Substack called Cassandra Unchained, which has over 300,000 subscribers. But he has never stopped viewing the financing of the AI build-out as a house of cards. Like Eisman, he has been relentlessly pointing out various AI-related financing techniques that are, unquestionably, reminiscent of Enron and the 2008 financial crisis. “History is repeating,” he posted ominously in mid-August. “Time to read this one again or for the first time,” he added, referring to The Smartest Guys in the Room, the 2003 book about the Enron debacle.