{"slug": "investors-laying-groundwork-to-profit-massively-when-economy-collapses", "title": "Investors Laying Groundwork to Profit Massively When Economy Collapses", "summary": "Short interest in the S&P 500 has reached its highest level since S3 Partners began tracking the data in 2010, with 3.7% of the index's free float now tied up in short bets, nearly double the level from a year ago and approaching the 3.8% seen before the 2008 financial crisis. The surge in bearish positioning reflects growing investor skepticism about the AI-driven market rally, as spending on AI has surpassed $1.6 trillion without corresponding revenue growth, exemplified by Alphabet reporting negative free cash flow and raising capital expenditure by $5 to $25 billion.", "body_md": "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.\n\nA 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](https://www.businessinsider.com/stock-market-sp500-short-interest-record-high-chip-stocks-ai-2026-7). 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.\n\nThat’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](https://futurism.com/future-society/impending-market-collapse-ai-bubble-stocks-overvalued) suggesting the economy is due for a major reckoning.\n\nStripping 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 percen](https://www.theguardian.com/technology/2026/jun/07/billions-spent-hypothetical-returns-the-ai-boom-explained-with-six-charts)t 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.\n\nFor years, a few brave [economists](https://futurism.com/economist-ai-bubble-worse-dot-com-implosion) and [financial analysts](https://futurism.com/future-society/analyst-bloomberg-ai-bubble) 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.\n\nThe 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](https://www.aljazeera.com/news/2026/2/19/visualising-ai-spending-how-does-it-compare-with-historys-mega-projects) as of 2026. But whether we’re looking at [data centers](https://futurism.com/future-society/ai-data-centers-finances), [digital ad revenue](https://futurism.com/artificial-intelligence/openai-ad-revenue-ai-advertising-financial-projection), or the [cost of inference](https://futurism.com/artificial-intelligence/problem-ai-industry-collapse-efficiency), 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.\n\nThis is the situation that has investors — and plenty of [regular people](https://futurism.com/artificial-intelligence/ai-bubble-fears-tsmc-nvidia-earnings) — nervous about the AI financial bubble. A perfect example can be found in Google’s parent company Alphabet, which reported its second 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](https://www.cnbc.com/2026/07/23/tesla-tsla-alphabet-googl-stock-today.html), sending investors\n\n[running for the hills](https://finance.yahoo.com/markets/stocks/article/googles-extreme-ai-capex-spending-plans-trigger-a-technical-warning-on-the-stock-price-120952068.html)as the long-promised AI revolution remains a long way off.\n\n**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](https://futurism.com/future-society/softbank-ceo-openai-ai-bubble-masayoshi-son)", "url": "https://wpnews.pro/news/investors-laying-groundwork-to-profit-massively-when-economy-collapses", "canonical_source": "https://futurism.com/future-society/investors-shorting-economy", "published_at": "2026-07-24 17:07:10+00:00", "updated_at": "2026-07-24 17:28:35.911500+00:00", "lang": "en", "topics": ["artificial-intelligence", "ai-startups", "ai-infrastructure"], "entities": ["S3 Partners", "S&P 500", "Alphabet", "Google", "CNBC", "Business Insider"], "alternates": {"html": "https://wpnews.pro/news/investors-laying-groundwork-to-profit-massively-when-economy-collapses", "markdown": "https://wpnews.pro/news/investors-laying-groundwork-to-profit-massively-when-economy-collapses.md", "text": "https://wpnews.pro/news/investors-laying-groundwork-to-profit-massively-when-economy-collapses.txt", "jsonld": "https://wpnews.pro/news/investors-laying-groundwork-to-profit-massively-when-economy-collapses.jsonld"}}