Co-author of viral post on AI impact says he was shorting those stocks

By Steve Goldstein

AI fears hit software and other sectors on Monday.

The co-author of a report musing about artificial intelligence disrupting a host of businesses says he was betting those companies would go down in value.

Alap Shah, the chief investment officer of Lotus Technology Management, said in a Bloomberg Television interview that his firm had "a set of shorts against businesses that we think are going to be disrupted by AI."

Citrini, the research service, did not disclose any short bets in the piece titled "The 2028 global intelligence crisis" that some say contributed to the stock market's decline on Monday. The Lotus website does say its hedge fund strategy combines long and short positions, as does its Form ADV filed with the Securities and Exchange Commission describing its investing strategy.

Shah also said that the company owns semiconductor stocks it thinks will benefit. But he said moving the stocks of his portfolio wasn't the point of the article. "We just wanted to get this story out to the market, because while the risk to individual stocks is certainly meaningful, the main story for us is that the risk to the overall economy, and ultimately, the consumer economy, in a world where we don't figure out what to do if the jobs start going faster than we think."

He called for taxing windfall gains made from AI to "keep our society running in whole."

Shah, the former CEO of Sentieo, a data platform subsequently sold to Alphasense, said he was surprised by the market reaction.

"Yeah, I was. It was definitely larger than expected," he said. But he said the AI trade has been going on for three-and-half years, mostly uninterrupted. "And so there really aren't many incremental buyers left."

He added that software companies right now have no way to disprove the thesis of disruption because that thesis is that the disruption will come in a few years, rather than now. "And so we just are entering a really kind of highly volatile time in the markets because the timelines are short."

S&P 500 futures (ES00) rose 0.2% on Tuesday, after the S&P 500 SPX retreated by 1% on Monday.

The iShares Expanded Tech-Software Sector ETF IGV dropped nearly 5% on Monday.

-Steve Goldstein

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