Carson Block is reconsidering Muddy Waters Capital’s plans for a long-short fund in India because of the potential impact of artificial intelligence on labor markets and equity valuations, according to Bloomberg. Block said the firm is “going back to the lab” on the idea, signaling that AI-related risks are now a central part of its thinking about where to invest and how markets may behave.
The comments come as Block, the founder of the well-known short-selling firm, weighs how the AI boom could reshape global stock markets beyond the United States. In an interview with Bloomberg’s Insight with Haslinda Amin, he discussed the sustainability of the AI rally and the possibility that automation could pressure jobs and earnings across sectors, including in India. Bloomberg said those concerns are prompting him to reassess the strategy.
India has been of interest to some global investors because of its growth story, expanding public markets and large technology workforce. But Block’s remarks suggest that the same AI forces lifting parts of the market could also create new vulnerabilities, especially if job displacement or changing business models affect company fundamentals. That matters for investors who have treated India as a relatively strong alternative to other major markets.
According to Bloomberg, Block’s view reflects a broader debate about whether AI-driven market gains are being supported by durable earnings growth or by enthusiasm that may prove harder to sustain. His comments also fit with his reputation for challenging market consensus and looking for areas where pricing may not match underlying risks.
For Muddy Waters, the reassessment appears to be at an early stage rather than a final decision. Block’s description of the firm “going back to the lab” suggests it is still testing whether an India fund makes sense under current conditions, with AI a key factor in that review.
The timing is notable because investors worldwide are trying to judge how much of the AI trade is built on real productivity gains and how much is driven by speculation. Block’s caution indicates that, in his view, the answer could influence not only U.S. stocks but also emerging markets such as India, where technology exposure and labor-market shifts may shape returns in the years ahead.
