Shares of Take-Two Interactive Software, Inc (NASDAQ:TTWO) rallied in early trading on Tuesday, after the company Monday reported its fiscal second-quarter results.The company's quarterly results were calm and steady. They came just ten days before the launch of Grand Theft Auto VI (GTA VI), according to BTIG.
Steve Eisman, famous for betting against the housing market before the 2008 crash, sees a 70% chance the AI boom ends in a bear market or worse.
He sees two ways it could go wrong: AI succeeds while investors lose money, or the technology fails to live up to its hype.
In the latest episode of The Real Eisman Playbook, he assigns 40% odds to a bear market caused by excessive investment despite AI's success. Another 30% goes to a scenario where AI proves overhyped, triggering a market crash and U.S. recession.
30% goes to the bull case.
Eisman compares AI to the railroads and early internet, technologies that transformed the world while leaving a trail of bankruptcies.
Why AI Could Succeed and Stocks Still Crash
Eisman cited expectations that technology giants will spend roughly $850 billion on AI infrastructure this year. He also pointed to research suggesting US data center capacity could reach twice actual demand by late 2027.
"There is simply way too much capex chasing demand," he said of his 40% scenario.
Competition adds another threat. Eisman argues OpenAI and Anthropic have little protection against cheaper Chinese models, leaving customers free to switch providers.
Their models are superior, he conceded, but "you don't need a Mercedes-Benz for every trip."
What Happens if the Money Stops?
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