Michael Burry, the investor known for his “Big Short” investment, has issued a warning about the unpredictability of an AI bubble burst. He has also criticized Nvidia‘s role in contributing to the hype surrounding this bubble.
What Happened: Burry stated in a Substack post that it’s impossible to time or predict the burst of the AI bubble. He suggested that the bubble might still have potential to expand.
In the post, Burry also expressed his belief that the stock market could be on the brink of a significant upside, while simultaneously nearing a generational top. He pointed to “supply-side gluttony,” such as massive data-center build-outs and multibillion-dollar commitments without real end-user demand, as a cause for concern.
The investor attributed much of the AI bubble hype to marketing efforts by Nvidia CEO Jensen Huang. He also warned against shorting stocks or buying puts on stocks, as overvalued stocks often have the most upward momentum.
Burry launched a paywalled Substack, Cassandra Unchained, in November, where he has been critical of Nvidia, likening the chipmaking giant to Cisco during the dot-com crash.
Also Read: Michael Burry Revisits His Viral ‘Sell’ Call: ‘/Meme Corrected’
Why It Matters: Burry’s warning about the AI bubble burst comes at a time when AI is being hailed as the next big thing in technology. His criticism of Nvidia, a leading player in the AI space, raises questions about the sustainability of the current hype.
His comparison of Nvidia to Cisco during the dot-com crash suggests that he sees parallels between the current AI bubble and the dot-com bubble of the late 1990s.
This could imply that he believes the AI bubble is nearing its peak and could burst soon, leading to significant market volatility. However, as Burry himself admits, it is impossible to predict exactly when this might happen.
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