America’s biggest investor Michael Burry who is known for predicting the 2008 US housing crash and portrayed in The Big Short, has now issued a warning about the stock market’s current obsession with artificial intelligence. As reported by CNCB, “Absolutely non-stop AI. Nobody is talking about anything else all day,” Burry wrote in a Substack post Friday, after listening to hours of financial coverage during a long drive. Burry believes that markets are no linger reacting rationally to economic data such as job reports or consumer sentiments. On May 8, the S&P 500 hit a fresh record high, buoyed by a better-than-expected April jobs report, even as consumer sentiment fell to a record low. “Stocks are not up or down because of jobs or consumer sentiment,” Burry wrote. “They are going straight up because they have been going straight up. On a two-letter thesis that everyone thinks they understand… Feeling like the last months of the 1999-2000 bubble.”
The semiconductor surge
Along with this, Burry also compared the recent trajectory of the Philadelphia Semiconductor Index (SOX) to the run-up before the dot-com crash in March 2000. The index surged more than 10% this week, pushing its 2026 gains to 65%.The warning from Burry comes as investors continue to pour into AI-linked stocks, driving semiconductor firms and megacap tech companies to repeated record highs. Enthusiasm around generative AI has fueled sharp gains in valuations.Other prominent investors have voiced similar concerns. Billionaire trader Paul Tudor Jones told CNBC’s Squawk Box that today’s environment feels like 1999 — about a year before the dot-com peak — and suggested the rally could continue for another year or two. But he cautioned that the eventual correction could be dramatic if valuations keep expanding.“Just imagine the stock market went up another 40%,” Jones said. “The stock market GDP is going to probably be good lord 300%, 350%. You just know that there’ll be some… breathtaking kind of corrections.”
Trillions of dollars at risk
Earlier this year, Burry cautioned that tech giants like Google and Microsoft are pouring trillions into infrastructure that may never deliver lasting returns. “When the department store across the street put an escalator in, he had to, too. In the end, neither benefited… That is how most AI implementation will play out,” Burry wrote. He believes that hyperscalers are wasting huge sums on microchips and data centers which will quickly become obsolete and powering chatbots and AI tools that will soon be commoditised.Burry further warned that trillions of dollars being spent have “no clear path to utilization by the real economy.” He feels that the competitors will benefit equally, leaving no durable advantage. “We’re past the point where stocks will reward investors for further buildout, and entering the period where the true costs and lack of revenue will start to show themselves,” he cautioned. Burry also predicted that the employment in the tech industry will stagnate or decline, signalling a long downturn.
