Another glowing red indicator just lit up on the control panel steering the US economy: short sellers have placed a nearly unprecedented magnitude of bets against the domestic stock market.

A new analysis by the firm S3 Partners has found that short interest in the S&P 500 is now the highest it’s been since the company began compiling that data in 2010, Business Insider reports. In all, S3 found that roughly 3.7 percent of the S&P’s free float — meaning the total market value of shares available to the public for trading — is now tied up in short interest.

That’s a significant number, almost double the short interest in the S&P at the same time last year. For context, BI notes that roughly 3.8 percent of the S&P was hedged against itself right before the 2008 financial crisis, adding to a growing number of data points suggesting the economy is due for a major reckoning.

Stripping it down to plain English, this is a glaring indication that institutional investors are trying to get ahead of the AI financial bubble, which accounts for roughly 60 percent of the index’s growth since April. And the fact that a growing number of investors aren’t just exiting positions, but are actively betting against the US stock market is a massive tell.

For years, a few brave economists and financial analysts have pointed to the fact that the amount of money being spent on AI continues to rise as evidence that the AI bubble is unsustainable.

The thing is, investors are fine with rising costs if there’s enough revenue coming in to justify the spending, which for AI development has already eclipsed $1.6 trillion as of 2026. But whether we’re looking at data centers, digital ad revenue, or the cost of inference, the kind of revenue growth needed simply isn’t there, as the leading tech companies play an increasingly expensive game of kick-the-can-down-the-road.

This is the situation that has investors — and plenty of regular people — nervous about the AI financial bubble. A perfect example can be found in Google’s parent company Alphabet, which reported its first quarter of negative free cash flow this week. The company likewise raised its capital expenditure expectations by a cool $5 to $25 billion, CNBC reported, sending investors running for the hills as the long-promised AI revolution remains a world away.

More on the AI bubble: SoftBank CEO Says You’re Too Stupid to Understand What’s Going on If You Believe the AI Bubble Is Real

The post Investors Laying Groundwork to Profit Massively When Economy Collapses appeared first on Futurism.

As shares of Elon Musk’s SpaceX continue to dip, short sellers betting against the company are making an absolute fortune.

As Reuters reported last week, short sellers had already made a whopping $8.7 billion in profit — and that was when the company’s stock was trading around $135. Since then, shares have cratered, dipping all the way down to an all-time low of $118 by Wednesday.

As a result, even more short sellers are throwing themselves at the chance to bet against the company, as CNBC reports. According to estimates from financial software company S3 Partners, around 206 million shares are being shorted, just under a third of all publicly tradable shares. That’s up from around 185 million just last week and only 40 million shares one month ago.

“We continue to see short sellers adding exposure ahead of several key upcoming catalysts, including the company’s first earnings report as a public company and subsequent lock-up expirations,” S3 head of research Matthew Unterman told CNBC.

Musk, who has an extensive track record of raging against Tesla short sellers, is clearly letting the issue get under his skin.

“The survival probability of firms who maintain a significant short position in SpaceX over time is very low,” he tweeted.

The almost-trillionaire also rehashed his belief that “SpaceX will be worth more than Earth if we achieve our goals,” stating without evidence that his extremely far-fetched prediction was “obviously true.”

But before it has any chance to take over the entire world, SpaceX has a lot to prove. The company confirmed this week that it will release its first quarterly earnings report on August 4, a major litmus test of where the company’s headed.

Chances are it won’t be pretty. SpaceX’s market capitalization of over $1.6 trillion — making it one of the most valuable companies in the world — has little to no bearing on its current business fundamentals. The company lost almost $5 billion last year. Musk’s xAI, which was folded into SpaceX earlier this year and renamed to SpaceXAI, similarly lost $6.4 billion.

To regain ground lost ground, Musk will have to convince investors of his lofty and untested goals of sending data centers into space and settling on the Moon with the help of SpaceX’s behemoth Starship spacecraft.

Those claims will be put to the test Thursday, when the company has scheduled another test of the mammoth rocket — and regardless of the outcome, we’re likely to see substantial stock movement in its wake.

More on SpaceX: Short Sellers Are Having a Field Day Betting Against SpaceX as Shares Continue to Slip

The post Short Sellers Are Going Hog Wild Against SpaceX as Its Stock Craters appeared first on Futurism.

For years, AI companies have been selling investors on the idea that scaling up operations is the key to success — the bigger the AI model, the more powerful it becomes.

But in practice, that premise is leading to enormous business problems. As The Atlantic points out, LLMs are suffering from severely diminishing returns: the cost of inference, or the act of using a trained AI model to process new data, is rising exponentially, making the tech far less lucrative than it was even half a year ago.

Put simply, it’s effectively the opposite of what investors would conventionally want to see, as The Atlantic argues, which would be a continuous drop in cost per user instead of the reverse.

That’s bad news for an industry pouring billions of dollars into the construction of enormous data centers across the country, despite having no clear path to profitability in the foreseeable future. While it’s impossible to predict when exactly fears of an AI bubble will hit a breaking point, analysts warn it’s a matter of when, not if. The consequences could be disastrous if the industry were to collapse in on itself, bringing down entire economies — which have vastly over-indexed on AI tech — with it.

Nonetheless, AI companies are steadfast in their belief that chatbots, like OpenAI’s ChatGPT and Anthropic’s Claude, are the future. They’ve become practically inescapable in our day-to-day lives, from integrations in operating systems to replacing humans on customer service calls — despite a major public backlash that represents another headwind for the industry.

Meeting AI’s rapidly growing demands will also require revolutionary leaps in hardware tech that are becoming increasingly harder to come by, with experts warning of the imminent end of Moore’s Law, the decades-old truism that more transistors steadily improved computing power.

In short, as behemoth AI models are quickly becoming unaffordable to those who’ve grown to rely on them, they’re also becoming far less efficient — a concerning trajectory that could nudge the entire economy closer to the brink.

For a while now, Yann LeCun, one of the so-called godfathers of AI, has been warning that LLMs are a “dead end” and won’t bring us to the much-touted point where AI intelligence matches or exceeds that of human intelligence.

But whether tech leaders who are already deeply invested in scaling up the current crop of AI models will heed those warnings feels increasingly unlikely.

More on AI: AI Bubble Fears Are Starting to Spill Over

The post There’s a Gigantic Problem at the Heart of the AI Industry That Could Cause the Whole Thing to Collapse appeared first on Futurism.