Michael Burry says the AI boom is a bubble of epic proportions, and there’s no way to stop it from popping and taking down the stock market and economy with it.
“The government will pull out all the stops to save the AI bubble to save the market to save the economy,” Burry wrote on X late Tuesday. “The problem is too big to save.”
The investor of “The Big Short” fame issued the dire warning in response to a post by George Noble, a former hedge fund manager and ex-assistant to famed investor Peter Lynch at Fidelity.
Noble wrote that “OPENAI IS FALLING APART IN REAL TIME.” He pointed to the ChatGPT maker’s raft of challenges, including fierce competition from Google’s Gemini 3 and other AI models, soaring costs, widening losses, and Elon Musk’s lawsuit against it.
“This is not surprising and will not end with OpenAI,” Burry responded on X. The vast sums “being spent and lent by the richest companies on Earth will not buy enough time-by the very definition of mania.”
Burry, who pivoted from running a hedge fund to writing on Substack late last year, called out OpenAI in his first post for its “dreamy” spending target of $1.4 trillion over eight years.
OpenAI’s annualized revenue has grown from $2 billion in 2023 to more than $20 billion last year, its finance chief disclosed in a blog post this week.
Burry has also compared Sam Altman’s company to a dot-com disaster. “OpenAI is the next Netscape, doomed and hemorrhaging cash,” Burry wrote in early December.
The contrarian investor, best known for predicting and profiting from the collapse of the mid-2000s housing bubble, has previously said on Substack that he’s surprised that the startup “kicked off a multi-trillion-dollar infrastructure race,” and he would short OpenAI if it was a public company.
America’s eight most valuable public companies — Nvidia, Alphabet, Apple, Microsoft, Amazon, Broadcom, Meta, and Tesla — are all tech titans that are betting big on AI. Each has a market capitalization over $1 trillion, and together they’re valued at north of $22 trillion.
The federal government stepped in to save embattled banks during the financial crisis after determining they were “too big to fail.”
The decision to bail out financial institutions drew widespread criticism, particularly as many individuals affected by the downturn received limited support.
Experts are divided over whether the AI boom is a tech revolution or a temporary euphoria. Jeremy Grantham, a veteran investor and bubble historian, recently said the “probabilities that AI will not bust are slim to none.”
In contrast, “Shark Tank” star Kevin O’Leary and tech investor Ross Gerber told Business Insider last fall they weren’t worried as AI was supercharging productivity and fueling rapid growth.
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