Hedge Fund Founder: AI Could Trigger a Stock Market Crash Larger Than 2008

Coin World News reports that, according to hot discussions on Wall Street, Carson Block, founder of Muddy Waters, said that the rapid adoption of AI may trigger a stock market shock on a scale larger than the 2008 to 2009 global financial crisis. He noted that this year, sectors such as software—which are viewed as losers in AI—are being ruthlessly sold off, which signals that short-selling could regain momentum. According to data from Goldman Sachs, by February this year, the short positions in S&P 500 index constituents had nearly reached the highest level in the past decade, and the short exposure targeted at the software sector has risen to the highest point since records began in 2016.

Block believes that AI’s impact on the job market will reduce the flow of funds into U.S. 401k retirement plans, thereby weakening stock prices and also affecting government finances and financial stability. In addition, he warned that in the private credit market—where large amounts of capital are currently pouring in but cannot generate enough high-quality loans—this asset class may become saturated with junk assets, and as the economic pillars that support credit grow fragile, the risk is that conditions in private credit will rapidly deteriorate.