Michael Burry, the investor famed for predicting the 2008 housing crash and inspiring the film The Big Short, has resurfaced to issue a new warning about market excess—this time targeting the AI-driven tech rally. In his first post on X since 2023, Burry shared an image from the movie. It was from a scene where Burry, played by Christian Bale, stared at subprime mortgage tables in disbelief. Burry added a cryptic message: "Sometimes, we see bubbles. Sometimes, there is something to do about it. Sometimes, the only winning move is not to play." The line echoes the 1983 film WarGames, where an AI concludes that the safest strategy in a no-win scenario is not to participate.
Burry's return to the public eye coincides with a period of extraordinary gains for major tech stocks, especially Nvidia, which has soared over 1,200% since early 2023 and recently hit a $5 trillion market value. He appears to be cautioning investors that the current frenzy around artificial intelligence is a bubble, one so inflated that the best course may be to simply sit it out, Business Insider reports. Reinforcing his warning, Burry updated his social media profile to "Cassandra Unchained," referencing the mythological figure doomed to give accurate but ignored prophecies, and changed his header image to an artwork mocking the Dutch tulip mania.
Burry, who manages the Scion Asset Management hedge fund, has a long history of contrarian bets, from early investments in GameStop to shorting Tesla and Apple. He sounded alarms about widespread speculation in 2021 and drew the ire of Elon Musk, who called him a "broken clock." Despite his dire predictions, Burry's hedge fund appeared to take a more optimistic turn earlier this year, shifting from bearish bets to a wider range of bullish positions. His next filing, showing the fund's holdings for the third quarter of this year, is due in a couple of weeks.
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Burry's apparent warning comes as more people are raising concerns about the AI boom led by a handful of companies, Bloomberg reports. One major worry for investors is a shift in how Big Tech companies are funding huge capital expenditures to grow their AI capacity, reports MarketWatch. Such concerns contributed to Meta's drop of more than 11% on Thursday. The company recently disclosed that constructing its Hyperion data center in Louisiana will involve a $27.3 billion bond, the largest corporate bond in US history. The Financial Times has much more on the unusual and complicated deal, which it calls "all wild and fascinating, if this sort of thing is your bag."
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