Legendary short-seller Jim Chanos is sounding the alarm on a growing Wall Street trend that echoes one of history’s most infamous corporate collapses.
In a new Bloomberg interview, the veteran investor says some of the biggest beneficiaries of the AI boom, including Nvidia and Microsoft, are using financial structures reminiscent of those that helped fuel the Enron disaster over two decades ago.
Chanos says he’s growing uneasy about the rise of so-called special purpose vehicles, or SPVs.
“One of the things that has caught my eye that is concerning now is we’re starting to see the advent of so-called SPVs, which are entities, and this comes from the Enron era, and the global financial crisis, entities that are specifically set up to hold assets, borrow against those assets and take them off balance sheets. So you just show an equity investment as opposed to the massive amount of debt that’s being taken on.”
He says large AI players appear to be using creative accounting and financing methods to shift the cost of expensive hardware investments out of sight.
“If there’s one sort of consistent theme that we’re seeing amongst the players that know this the best, NVIDIA, Microsoft, companies like that, is they seem to now be willing to do anything to get the actual equipment off their books and either keep it in the footnotes or use innovative financing to sell it.”
Chanos compares today’s environment to the late 1990s, when hype-driven valuations and hidden liabilities helped inflate the internet bubble. He says AI has become the dominant “displacement idea” of this cycle, drawing capital and investor belief far faster than fundamentals may justify.
“If the internet was the displacement idea of the 90s, certainly it’s AI right now. And if AI goes, there’s not going to be a lot of places to hide because it’s so embedded right now in the psyche of investors. So we better hope it works. Because if not, there might be some disappointment down the road.”
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