Steve Eisman: One Company Could Break The AI Boom

SPEAKER_1 (0:00)

Support for the show comes from Morgan Stanley's podcast, Hard Lessons. Some investing lessons only become clear after you see how a call plays out. On Hard Lessons, iconic investors sit down with Morgan Stanley leaders to go behind the scenes on the critical moments both successes and setbacks that shaped who they are today. Watch or listen to Hard Lessons wherever you get your podcasts.

SPEAKER_2 (0:23)

Interrupted sleep, headaches, constant fatigue. For a lot of women, these aren't three separate issues. In perimenopause and menopause, they're often the same hormonal story, and you don't have to quietly push through. Midi can help because your symptoms have answers. Visit joinmidi.com with Code Vox right now to book your first visit today. That's joinmidi.com, Code Vox to book your first visit. joinmidi.com, Code Vox.

Insurance coverage varies. Check with your plan for coverage.

SPEAKER_3 (1:00)

This episode is brought to you by Palmolive. Family time isn't just the big moments, it's weeknight dinners, sitting around the table, everyone talking all at once. So when the plates are empty and the sink is full, use Palmolive Ultra. Palmolive's most powerful formula removes up to 99.9% of grease, leaving your dishes sparkling clean. And the new convenient pump makes cleaning even easier, so you can spend less time tackling dishes and more time together Or. shop now at palmolive.com.

SPEAKER_4 (1:33)

Listen to me.

SPEAKER_1 (1:33)

Markets are bigger than us.

SPEAKER_4 (1:34)

What you have here is a structural change in the world distribution.

Steve Eisman (1:37)

Cash is trash.

SPEAKER_4 (1:39)

Stocks look pretty attractive.

SPEAKER_1 (1:40)

Something's going to break.

Ed Elson (1:41)

Forget about it. Welcome to Prof G Markets.

This week marked the end of the third quarter and there is a lot to unpack. We had AI researchers warning that the technology could pose an existential threat to humanity. The Fed raised rates for the first time in three years. Treasury yields hit multi-decade highs and we started to get a sense of what we're going to see in the Anthropic IPO. Those are just a few of the highlights. So we wanted to take a step back and break down what happened this quarter, what the biggest takeaways are and what we can expect heading into the final quarter of the year. So to help us make sense of it all, we are joined by a guest who has been helping us navigate this year's headlines and separate the signal from the noise. Here is our conversation with Steve Eisman, Investment Analyst, Portfolio Manager, and Big Short Legend. Steve, great to have you back on the show. I want to start with a clip that you went very viral for.

This was from your recent interview on CNBC, where you all were discussing all of these doomerist threats from these AI companies, saying that there's a 10% chance that humanity will go extinct because of AI, or even higher probability ratings. You had a very interesting take on the matter. A lot of people heard it. I'm going to play it, and we'll get your reaction.

Steve Eisman (3:04)

The idea that this whole Terminator thing is nonsense. So I think something completely different is going on. And what I think is happening is that token maxing is over.

The open weight models are taking big market share. I think these companies are very nervous. They realize that there are no motes around their business whatsoever. And they're trying to manufacture a crisis that will create regulation, and that they think they can then manipulate to create the motes, to create the duopoly that they want.

Ed Elson (3:37)

Talk more about what you mean by all of that.

Steve Eisman (3:40)

Well, I didn't know that went viral.

SPEAKER_2 (3:43)

Thanks for letting me know. It did, it did.

Steve Eisman (3:48)

I grew up reading a tremendous amount of science fiction, like an insane amount. And I'm just amused by the fact that I think all these people who live in Silicon Valley basically read almost as much science fiction as I did, they just take it very seriously.

And that's funny, but I think also true. I mean, the idea that AI, first of all, there's absolutely no evidence whatsoever that AI is anywhere close to AGI, none, absolutely none. I mean, what AI is, is like a next word retrieval model. That's what it is. It doesn't think. And there's no evidence at all that it's ever going to think. Now, maybe one day it will, but even even so, the idea that somehow that is going to literally create Terminator, I think, is insane. By the way, I rewatched Terminator 1 and Terminator 2 Still good. Okay. I enjoyed both movies enormously, even though the sci-fi effects obviously weren't so great anymore. You know, when somebody says that the world's about to end, I just don't take it seriously. So I have to ask myself, okay, if they really don't believe that the world's going to end, I mean, maybe some of them do, but I don't think any of the senior people really do.