(Nov 20): It’s not the time to bet against the biggest US technology names, according to short-seller Carson Block, even as warnings rise about a potential bubble in artificial intelligence (AI).
“I would much rather be long than be short in this market,” Block, chief executive officer of Muddy Waters Capital, said in an interview on Bloomberg Television. “If you’re out there trying to short Nvidia or any of these big tech names, you’re not going to be in business very long.”
US stocks have been roiled in recent days on investor concerns that the tech rally had run too hot. The S&P 500 has fallen more than 3% from an October peak, and executives at Goldman Sachs Group Inc and JPMorgan Chase & Co have said the market could be primed for more declines.
Some of those fears were assuaged late on Wednesday after Nvidia Corp delivered a surprisingly strong revenue forecast and pushed back on the idea of a bubble. Technology-heavy Nasdaq 100 futures gained 1.5% on Thursday.
Muddy Waters’ Block said he was looking at some smaller companies involved in AI for potential bearish bets.
See also: India seeks chipmaking parity with major producers by 2032
“You have all these AI adjacent companies, AI pretenders, that’s where you would want to look to short,” he said. “However, so long as the leaders such as Nvidia are still going up into the right, that would be a very dangerous trade.”
He added that the boom in passive trading had “broken the markets in terms of greatly diminishing price discovery”.
“It doesn’t matter how expensive Nvidia gets,” Block said. “All of these funds that are buying the S&P 500 index, they will not sell Nvidia until they have net outflows. They will buy it everyday at whatever the price is if they have inflows.”
See also: Meta AI pioneer LeCun announces exit, plans new startup
On Wednesday, Block unveiled a rare long position in Canadian miner Snowline Gold Corp at the Sohn London Investment Conference. Snowline’s shares rallied as much as 23%.
Uploaded by Felyx Teoh
