Jim Chanos made his name calling Enron before it collapsed.
Now the veteran short seller says we’re “closer to a ’99-type moment than a ’97,” meaning the year before the dot-com crash, not the one where the party still had years to run.
Speaking on the Prof G Markets podcast Friday, the Chanos & Company founder said one signal has been foolproof at marking the late stage of a bubble: a flood of companies selling new stock.
That flood had been missing from the boom, but 2026 is "an entirely different animal," Chanos said, pointing to SpaceX (NASDAQ:SPCX)‘s record IPO.
“Wall Street has a printing press as well as the Fed,” he said, and in 2026 it is running “full bore.”
He also flagged an accounting mismatch he said is inflating S&P earnings.
Companies doing the spending capitalize AI capex and depreciate it over five to 10 years, while suppliers like Nvidia Corp. (NASDAQ:NVDA) recognize the spending immediately as revenue, along with the associated profit.
Corporate profits “maybe should be growing eight or nine” percent, Chanos said, “but they’re growing somewhere like 28 or 29.”
A ‘Golden Age of Fraud’
“I’ve already dubbed this the golden age of fraud,” said Chanos. “I suspect that when we’re on the down part of this cycle, the bodies will float to the surface as they always do.”
His argument is that fraud follows the financial cycle with a lag. The longer a boom runs, the more bad behavior accumulates inside it.
“Nobody goes after frauds at all-time highs,” he said.
Regulators only move once investors have lost money, he added, because the resources to prosecute corporate fraud are political.
Short Tesla, SpaceX and the Neoclouds
His roughly 40-name short book includes “Mr. Musk’s two companies,” Tesla Inc. (NASDAQ:TSLA) and SpaceX (NASDAQ:SPCX), alongside unnamed neoclouds and Bitcoin (CRYPTO: BTC) miners reinventing themselves as data-center companies.
Hosts Scott Galloway and Ed Elson cited CoreWeave (NASDAQ:CRWV) and Nebius (NASDAQ:NBIS) as examples of the group.
“I prefer my CEOs to have a more, shall we say, strengthened relationship with the truth,” he said of Elon Musk.
He remains long the indices against those shorts, but said the megacaps are not immune. Hyperscaler returns on incremental invested capital have been “pretty much cut in half” over the past year and a half, he said, and “there could come a point 18 months from now where they’re all losing the race.”
Traders Price a 19% Chance of a Burst
Polymarket traders put a 19% chance on an AI industry downturn by Dec. 31, with roughly $2.9 million traded across the market. The contract requires at least three of six specified events within 90 days, including Nvidia closing 50% below its all-time high.
His advice: prune the “castles in the sky.” “If your favorite sell-side analyst is telling you the stock is cheap at only 40 times 2035 EBITDA, maybe step aside.”
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