Muddy Waters CEO: Now is not a good time to short large tech stocks

Wallstreetcn
2025.11.20 12:02
portai
I'm PortAI, I can summarize articles.

Big short Carson Block admitted that in the current market environment, he "would rather go long than short," and that shorting large tech stocks like NVIDIA would pose significant risks. However, some smaller AI-related companies are becoming potential short targets for Muddy Waters, especially those companies riding the AI wave for hype

NVIDIA's third-quarter performance greatly exceeded expectations, silencing the watchful short sellers in an instant.

Carson Block, CEO of the renowned short-selling firm Muddy Waters, stated, "Despite the increasing warnings about a potential bubble in artificial intelligence, now is not the right time to short the largest tech companies in the U.S." In an interview with Bloomberg Television on Thursday, he explicitly warned investors that shorting large tech stocks like NVIDIA will face significant risks.

Block admitted that in the current market environment, he "would rather go long than short." The investor, known for his aggressive short-selling strategies, pointed out that any investor attempting to short NVIDIA or other large tech stocks "won't stay in this industry for long."

U.S. stocks have recently experienced turbulence due to investor concerns about an overheated tech stock rally, with executives from Goldman Sachs and JP Morgan both indicating that the market may face further declines. Nevertheless, NVIDIA's strong revenue forecast and rebuttal of bubble theories announced on Wednesday somewhat alleviated market concerns, leading to a more than 6% rise in NVIDIA's after-hours stock price, while the tech stock representative Nasdaq 100 futures rose 1.5% on Thursday.

The Impact of Passive Investing on Price Discovery Mechanism

Block believes that the boom in passive trading has "largely weakened the price discovery function and disrupted market mechanisms." He explained that funds purchasing the S&P 500 index will buy stocks like NVIDIA at any price as long as there is capital inflow, without considering valuation.

"It doesn't matter how expensive NVIDIA becomes," Block stated. "All these funds buying the S&P 500 index will only sell NVIDIA when there is a net outflow of funds. As long as there is capital inflow, they will buy every day regardless of the price."

This viewpoint highlights the profound impact of passive investment strategies on the price formation mechanism of individual stocks, especially for large-cap tech giants.

Smaller AI Companies as Potential Short Targets

While maintaining a cautious stance on large tech stocks, Block revealed that he is monitoring some smaller AI-related companies as potential short targets, mainly those companies riding the AI wave for attention, which he refers to as "AI adjacent companies" or "AI impostors."

"You can focus on all these AI adjacent companies, AI impostors; that's where you want to short," Block said. "However, as long as leaders like NVIDIA continue to rise, it will be a very dangerous trade."

Source: Wallstreetcn The copyright of this article belongs to the original author/organization.
The views expressed herein are solely those of the author and do not reflect the stance of the platform. The content is intended for investment reference purposes only and shall not be considered as investment advice. Please contact us if you have any questions or suggestions regarding the content services provided by the platform.