“Big Short” whistleblower Jim Chanos: In a bull market, people are willing to pay a premium for promises; in a bear market, they discount them according to reality.

Golden Finance reported that on July 20, Jim Chanos, the founder of Chanos & Co. and a Wall Street legendary short-seller, said bluntly that this AI infrastructure investment boom has seen both the speed and scale of capital inflows hit historical records, but the economic logic that is supposed to support the boom has still not been proven, which is worrying. The market is currently playing a typical “buying-the-dream, not-the-reality” game: investors are willing to pay a premium for the promises companies make, but they do not care much about whether real numbers can be delivered. He warned that capital expenditures in the tens of billions of dollars are being built on short-term spot prices, yet they are being used to support asset investment decisions lasting up to 20 years—there is a fundamental maturity mismatch problem.

Chanos’ most core argument is that the capital efficiency of hyperscale cloud providers is systematically declining, and that will force providers to make a real strategic pivot in the next 12 to 18 months. Based on his estimates, for Google, Meta, Amazon, Microsoft, and Oracle, incremental capital return on investment has fallen from about 40% roughly a year and a half ago to around 20% now; if the growth rate of capital spending keeps up, that figure could fall further to 10%. Chanos said: “By that time, the operating teams at these companies will face a real question: should we keep burning money like this, or would it be simply more sensible to buy U.S. Treasuries?” He expects that this showdown moment will surface as early as between the end of 2026 and 2027, and it will be unavoidable then.

He summed up his observation of the market’s current pricing logic in one line: in a bull market, people are willing to pay a premium for promises; in a bear market, people only want discounts based on reality. We are clearly in the former right now. Whether it will move to the latter? I don’t know.