Chanos Warns of AI Pullback, ‘Absurd’ Bitcoin Treasury Companies

New York, June 30, 2025 — Renowned short-seller Jim Chanos has issued a stark warning to investors riding the artificial intelligence (AI) boom, cautioning that the sector is ripe for a pullback amid stretched valuations and speculative frenzy. In a separate critique, Chanos also labeled companies that adopt Bitcoin as a core part of their treasury strategy as “absurd,” stoking debate in both the AI and crypto investment communities.

AI Valuations at “Euphoric” Levels

Speaking at a recent investment forum, Chanos, founder of Kynikos Associates, underscored the disconnect between AI stock prices and their underlying business fundamentals.

“We are seeing a level of euphoria in AI similar to what we saw in the dot-com era,” Chanos said. “While the technology is transformative, the valuations in many of these stocks have become untethered from reality.”

AI giants like Nvidia, Super Micro Computer, and Palantir have surged over the past 18 months, driven by unprecedented demand for computing infrastructure and enterprise AI solutions. Nvidia, for example, saw its market capitalization cross $4 trillion in early June, making it briefly the world’s most valuable company before a correction trimmed gains.

However, Chanos believes the bubble is inflating fast.

“There’s a difference between a great company and a great stock. Many investors are confusing the two,” he warned, adding that high price-to-earnings ratios across the AI sector signal a “market priced for perfection.”

AI Revenue vs. Hype

Chanos emphasized that while some AI companies have delivered strong revenue growth, the broader industry is yet to demonstrate sustainable profitability.

“You can't value a company on potential forever. At some point, fundamentals must catch up,” he said.

A recent Goldman Sachs report echoed similar concerns, noting that only a handful of companies have seen tangible bottom-line benefits from AI deployments. While AI spending is expected to hit $1 trillion globally by 2030, the short-term monetization outlook remains uncertain.

Bitcoin as Corporate Treasury: “Absurd and Dangerous”

In a separate criticism, Chanos took direct aim at companies adding Bitcoin to their balance sheets as a treasury reserve asset, likening the practice to speculative gambling.

“It’s absurd for a public company to put shareholder capital into an unproductive, highly volatile asset like Bitcoin,” he said. “This isn’t treasury management. It’s speculation masquerading as strategy.”

Firms such as MicroStrategy and a growing cohort of smaller tech firms have invested billions of dollars in Bitcoin, citing long-term inflation hedging and decentralized finance principles. As of Q2 2025, MicroStrategy holds over 226,000 Bitcoins, worth an estimated $14 billion.

However, critics like Chanos argue that such strategies expose shareholders to significant downside risk, particularly if Bitcoin faces a steep correction.

Market Reaction Mixed

Market reaction to Chanos’s comments was divided. While some institutional investors echoed concerns about frothy AI stock valuations and Bitcoin’s volatility, others downplayed the warnings.

“Jim Chanos has made a career shorting overhyped sectors, and while he’s been right on names like Enron and Valeant, he’s also missed the mark in the past,” said Tara McIntyre, Chief Investment Strategist at SilverPeak Advisors. “The AI boom is rooted in real technological shifts, and Bitcoin adoption reflects evolving macro hedging strategies.”

Still, a handful of AI-related stocks dipped marginally following Chanos’s remarks. Shares of Palantir fell 2.1%, while Super Micro Computer slipped 1.5% during Monday’s session. Bitcoin, however, held steady around the $61,000 mark, unaffected by the short-seller’s comments.

Analyst Views: Bubble or Megatrend?

While Chanos’s critique may seem contrarian, other analysts have flagged similar cautionary notes.

“The market is pricing in a flawless AI adoption curve,” said Jerome Carter, Senior Equity Analyst at Vanguard Global Insights. “We see execution risk and potential regulatory headwinds in the next 12–18 months.”

On Bitcoin, Carter was more nuanced.

“Bitcoin as treasury reserve is not mainstream yet, but calling it absurd overlooks the macro context. It’s a hedge against fiat debasement in an increasingly debt-laden world.”

Still, consensus is building that investors may need to be selective in AI and crypto bets, favoring companies with proven execution and robust balance sheets.

Investor Outlook: Caution Advised

Chanos’s latest commentary serves as a timely reminder of the risks embedded in the current tech rally. With Federal Reserve policy still restrictive and geopolitical uncertainties looming, markets could face volatility ahead.

“AI will change the world, no doubt,” Chanos concluded. “But investing in it blindly at any price isn’t innovation — it’s speculation.”

For investors, the path forward may involve trimming overexposure to momentum-driven tech plays, diversifying across sectors, and emphasizing fundamentals over hype.