Wall Street Is Starting to Short AI
Wall Street traders have sharply increased how much they’re spending on credit default swaps tied to artificial intelligence. That means more and more investors are managing their risk by putting their money on the AI market’s eventual crash.
The volume of credit default swaps tied to US technology giants has risen 90 percent just since early September after being reportedly “thin to nonexistent” at the start of the year. (Charly Triballeau / AFP via Getty Images)
The secret is out about the potential artificial intelligence bubble — and Wall Street’s sharks smell blood in the water.
Wall Street traders have sharply increased how much they’re spending on “credit default swaps,” which, in case you weren’t paying attention during the movie The Big Short, are insurance derivatives that pay out when a company fails (a form of short).
Investors are shorting Big Tech companies, mainly Oracle and Meta, to “protect [themselves] and create a hedge,” one anonymous credit executive said. That means more and more investors are managing their risk by putting their money on the AI market’s eventual crash — just like in The Big Short.
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