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?”
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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.
“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.