"Big Short" Investor Steve Eisman Warns: OpenAI Bankruptcy Could Cause a Recession
Steve Eisman became well known for betting against the U.S. housing market before the 2008 mortgage crisis. He was recently interviewed on Ritholtz Wealth Management's The Compound and Friends podcast.
Eisman's story was one of those told in the best-selling book and movie The Big Short. He warned that the U.S. stock market now depends heavily on investments in artificial intelligence (AI). He argued that if one major AI start-up went out of business, it could cause a recession.
Eisman is not warning that 2008 will happen again. He did not say that he believes any major AI companies are in immediate danger. But if you want to understand the risks the AI stock boom could pose to the stability of the entire S&P 500, his views are worth hearing.
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Where did the AI boom come from? Corporate investment
The AI boom has been fueled by hundreds of billions of dollars that some of the world's biggest companies have invested. Large cloud computing companies, known as hyperscalers, such as Alphabet and Microsoft, spend hundreds of billions of dollars each year to build AI data centers, buy computer chips from companies like Nvidia, and develop AI models for products such as Microsoft Copilot and Google Gemini.
OpenAI and Anthropic, the companies behind ChatGPT and Claude, respectively, are not yet publicly traded, but both are preparing to sell shares to the public for the first time through initial public offerings (IPOs). These AI companies have become very important to the U.S. stock market because many major technology companies buy from them, build products with them, invest in them, and sell them computing power and cloud services.
The money spent on AI has also helped other parts of the U.S. economy. Construction companies, energy companies, utility providers, and businesses in other industries have earned more money as they receive a share of this spending. A recent analysis by Goldman Sachs found that, through September, the AI boom accounted for nearly 50% of the growth in earnings per share (EPS) for S&P 500 companies in 2026.
So what is the problem? What if the AI boom continues for years?
Eisman warns: The AI sector has a "concentration problem"
Based on what is happening with AI stocks, Eisman sees one major risk for the stock market: concentration risk. The S&P 500 now depends heavily on a small number of large companies. Technology stocks and a few major businesses are driving much of the recent economic activity linked to AI.
"The problem with the AI story is a concentration problem," Eisman said on The Compound and Friends. He pointed out that about 70% of Nvidia's unpaid customer bills, known as accounts receivable, come from just five customers. What would happen if one of those customers disappeared? He also noted that about 70% of the AI revenue earned by hyperscalers comes from just two companies: Anthropic and OpenAI.
What if one of these AI companies runs into trouble or fails to meet its investors' expectations? The whole AI stock boom could begin to shake. Eisman did not make any specific predictions about Anthropic or OpenAI, and he did not predict how individual AI stocks would perform. But he carefully explained the risks. He also said, while making clear that he was not predicting this would happen, "If OpenAI went bankrupt tomorrow... the U.S. economy would go into recession."
Should you still invest in the S&P 500 with AI bubble risks?
The so-called "AI bubble" might not burst. These major technology companies are making big bets on a future in which AI tools could help people and businesses work faster and more efficiently. This could lead to large economic gains for years to come. Their plans might succeed.
But even if spending on AI slows down or AI stocks suffer a major crash, Eisman does not believe the damage would be as bad as it was in the 2008 stock market crash. The risks we see in AI stocks today are "not the same thing" as the risks during the 2008 global financial crisis, he said.
Over the past 10 years, the S&P 500, as tracked by the Vanguard S&P 500 ETF (VOO +0.58%), has returned an average of about 15.3% per year. Over the past five years, VOO has returned about 13.8% per year on average, even though the market went through a severe bear market in 2022.
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These strong returns may not continue. Still, the S&P 500 has a long history of recovering from trouble, even though the market sometimes crashes. Over the long term, the S&P 500 has generally been a good investment, even for people who bought shares just before a bubble burst.