Steve Eisman is looking beyond the hype around tech, and is betting big on US infrastructure.
Greenification will mean significant investments in the grid, he told Bloomberg’s “Odd Lots” podcast.
He cited one utility stock that’s jumped 34% year to date, due to infrastructure needs.
While a handful of mega-cap tech stocks continue their ascent into sky-high valuations, Steve Eisman cited less enthusiasm for the sector, noting that his attention is on a different investment.
The legendary investor — made famous in the “Big Short” for correctly predicting the house market crash of 2008 — is betting big on US infrastructure, he said on Friday’s episode of Bloomberg’s “Odd Lots” podcast.
“If anybody gave me their money today, for example, I wouldn’t be so overweight tech. I’d be much more diversified. I’d have some, God forbid, bonds. There’s plenty of other stories other than tech,” he said. “For example, has anybody ever noticed that the electrical grid in the United States is pathetic?”
Big-name investors are going all-in on AI
Some of the best-known names in investing are betting big on artificial intelligence stocks.
Bill Ackman recently revealed a $1 billion bet on Google parent Alphabet, while Stanley Druckenmiller pumped a combined $430 million into Microsoft and Nvidia.
Tiger Global founder Chase Coleman, billionaire trader Paul Tudor Jones, and Ark Invest CIO Cathie Wood are all bullish on AI.
Some of the biggest names in investing are piling into artificial intelligence, the theme that has taken markets by storm in 2023.
Billionaire investors including Bill Ackman, Stanley Druckenmiller and David Tepper are betting big on firms at the forefront of the AI race – such as Microsoft, Alphabet and chipmaker Nvidia.
Here’s how seven top players are responding to the AI trend:
1. Bill Ackman
Ackman’s hedge fund revealed Monday that it had plowed over $1 billion into Alphabet in a quarter where the tech giant significantly ramped up its AI efforts.
Pershing Square Capital Management snapped up more than 10 million shares in Google’s parent company – buying about 2.2 million Class A shares and 8.1 million Class C shares, according to a Securities and Exchange Commission filing.
Hedge fund billionaire Coleman said last month that mega-cap stocks like Amazon now look like a good bet again after a brutal 2022, thanks to the rise of AI.
The Tiger Global founder told investors to buy the so-called FAANG stocks – shorthand for Facebook parent Meta, Apple, Amazon, Netflix, and Alphabet – and cited Amazon sellers’ use of ChatGPT to write product listings as an example of how AI was already boosting Big Tech.
3. Stanley Druckenmiller
Druckenmiller loaded up on Nvidia shares and made a new investment in Microsoft last quarter, snapping up two of the best-performing stocks of 2023.
The billionaire investor’s Duquesne Family Office bought a $220 million stake in Nvidia and upped its Microsoft position by $210 million, according to its latest 13F filing, released Monday.
Nvidia, the world’s No. 1 producer of graphics chips needed for high-intensity AI computing, has seen its share price double this year. Microsoft, which was an early investor in OpenAI and has integrated ChatGPT technology into its search engine Bing, is up 30%.
4. Paul Tudor Jones
Large language AI models like ChatGPT will have a massive impact on both the economy and the stock market, according to billionaire investor Jones.
He said Monday that the tool had completely shifted his outlook on both inflation and equities – and he’s now bracing for an AI-fueled “productivity boom” that drags down soaring prices and pushes up stock valuations.
“The introduction of large language models [and] artificial intelligence is going to create a productivity boom that we’ve only seen a few times in the last 75 years,” Jones told CNBC.
5. Morgan Stanley
It’s not just individual investors who are caught up in the AI fanfare.
In a research note last month, Morgan Stanley said that 2023 would be a breakthrough year for the technology, which it believes represents a $6 trillion investment opportunity.
“We see AI accelerating digital transformation and tech diffusion across the economy,” internet analyst Brian Nowak said in the note.
6. David Tepper
Like Ackman and Druckenmiller, the owner of the NFL’s Carolina Panthers made some big bets on AI over the past quarter.
Tepper’s family office Appaloosa Management bought 150,000 Nvidia shares worth around $42 million and 500,000 shares in Cathie Wood’s ARK Innovation ETF, which specializes in investing in disruptive tech.
Wood’s fund plunged last year but is up just under 24% in 2023 thanks to tech stocks’ massive rebound.
7. Cathie Wood
The Ark Invest CIO has never been one to miss out on a disruptive technological trend – and she’s been heralding AI’s potential long before ChatGPT’s explosion in popularity earlier this year.
In his view, the so-called greenification initiatives introduced by recent local and federal policies will open the doors to a serious investing opportunity. For example, as higher electricity demand is brought on by the expanded use of electric stoves, the grid will have to be redeveloped.
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“The estimates of improving the grid in the United States — everybody’s got a different estimate, but it’s like $200 billion, $300 billion — I mean, it’s unbelievable numbers,” the Neuberger Berman portfolio manager said.
Eisman has already seen this play out. Citing a utility stock called Quanta Services, he said “the opportunities for the company have been enormous, so the stock has been revalued.”
Shares currently trade at around $186, up 31% since the start of 2023 and up 450% since early 2020.
Also playing a role in his prediction is the overall state of US infrastructure, which he characterized as in deep need of an upgrade.
Eisman has bet on the grid since at least February, when he said that tech stocks might struggle in the face of climbing interest rates. Instead, he noted that greenification, infrastructure, and industrial onshoring were worth looking into.
Though he said on the podcast that tech stocks are investible for a long time, he said it’s unclear how they may move in the future.
Concerning artificial intelligence — the technology on which many of the mega-cap stocks have soared — Eisman said it’s too early to predict the real winners.
That’s as developments around the topic have mostly revolved around computer chips on which AI is created, while not enough time has been spent on how the technology will be applied.
“As of right now, the story is very narrow in terms of investing,” he said.
