Michael Burry, the legendary investor famous for predicting the 2008 housing crisis in “The Big Short,” has issued a stark warning that the AI boom represents a bubble of epic proportions that will inevitably collapse and drag down both the stock market and the broader economy. In a series of posts on X (formerly Twitter) on January 21, 2026, Burry declared that “the problem is too big to save,” even as governments attempt to intervene.
Burry’s warning came in response to former hedge fund manager George Noble, who claimed that “OpenAI is falling apart in real time.” Noble pointed to multiple challenges facing the ChatGPT maker, including intense competition from Google’s Gemini 3 and other AI models, skyrocketing operational costs, widening financial losses, and ongoing legal battles including Elon Musk’s lawsuit against the company.
The contrarian investor emphasized that the massive capital investments “being spent and lent by the richest companies on Earth will not buy enough time—by the very definition of mania.” He predicted that while the government will “pull out all the stops to save the AI bubble to save the market to save the economy,” these efforts will ultimately prove futile.
OpenAI’s financial trajectory has been particularly concerning to Burry. The company’s annualized revenue grew from $2 billion in 2023 to more than $20 billion in 2025, according to its finance chief. However, Burry has criticized OpenAI’s “dreamy” spending target of $1.4 trillion over eight years and compared Sam Altman’s company to Netscape, the dot-com era casualty, calling it “doomed and hemorrhaging cash.”
The stakes are enormous: America’s eight most valuable public companies—Nvidia, Alphabet, Apple, Microsoft, Amazon, Broadcom, Meta, and Tesla—are all heavily invested in AI, with combined market capitalizations exceeding $22 trillion. Each company has a valuation over $1 trillion and is betting big on artificial intelligence.
Burry, who transitioned from running a hedge fund to writing on Substack in late 2025, has stated he would short OpenAI if it were publicly traded. He expressed surprise that the startup “kicked off a multi-trillion-dollar infrastructure race” and questioned the sustainability of such massive investments. The debate over AI’s future remains divided, with bubble historian Jeremy Grantham stating that “the probabilities that AI will not bust are slim to none,” while investors like Kevin O’Leary and Ross Gerber remain optimistic about AI’s productivity gains.
Key Quotes
The government will pull out all the stops to save the AI bubble to save the market to save the economy. The problem is too big to save.
Michael Burry wrote this on X in response to concerns about OpenAI’s challenges. This statement draws a parallel to the 2008 financial crisis when the government intervened to save “too big to fail” banks, but Burry suggests the AI bubble has grown beyond the point where even government intervention can prevent collapse.
All the capital being spent and lent by the richest companies on earth will not buy enough time—by the very definition of mania.
Burry used this phrase to characterize the massive AI investments by trillion-dollar tech companies as a mania rather than rational business strategy. This directly challenges the sustainability of the multi-trillion-dollar AI infrastructure race currently underway.
OpenAI is the next Netscape, doomed and hemorrhaging cash.
Burry made this comparison in early December 2025, likening OpenAI to the famous dot-com bubble casualty Netscape. This analogy suggests that despite OpenAI’s rapid revenue growth to $20 billion annually, the company’s business model is fundamentally unsustainable, similar to many failed internet companies of the late 1990s.
The probabilities that AI will not bust are slim to none.
Veteran investor and bubble historian Jeremy Grantham made this statement, adding credibility to Burry’s warnings. Grantham’s expertise in identifying market bubbles throughout history lends additional weight to concerns that AI valuations have become detached from fundamental value.
Our Take
Burry’s warning represents a critical counternarrative to the AI euphoria dominating markets and tech discourse. His track record demands attention, but the situation is more nuanced than a simple bubble call. The fundamental question is whether AI represents genuine transformative technology or speculative excess—and the answer may be both.
What’s particularly concerning is the concentration of risk: eight companies worth $22 trillion are all betting heavily on the same technology trend. This creates systemic vulnerability that didn’t exist in previous bubbles. However, unlike the dot-com era or housing crisis, AI is already demonstrating real productivity gains and revenue generation, as evidenced by OpenAI’s growth from $2 billion to $20 billion in revenue.
The timing and magnitude of any potential correction remain uncertain. Markets can stay irrational longer than investors can stay solvent, and AI may deliver enough incremental value to justify some—if not all—of the current valuations. The real risk may not be total collapse but rather a painful recalibration of expectations and valuations over time.
Why This Matters
This warning from Michael Burry carries significant weight given his proven track record of identifying major market bubbles before they burst. His prediction that the AI boom is unsustainable challenges the prevailing narrative that artificial intelligence represents a transformative technological revolution worth trillions in investment.
The implications are profound for the entire tech sector and global economy. With the eight largest U.S. companies—collectively worth over $22 trillion—heavily invested in AI infrastructure, a bubble collapse could trigger a market catastrophe dwarfing previous crashes. Burry’s comparison to the “too big to fail” banking crisis suggests that even government intervention may prove inadequate.
For businesses and investors, this raises critical questions about AI investment strategies and valuations. Companies are pouring unprecedented resources into AI development, with OpenAI alone targeting $1.4 trillion in spending over eight years. If Burry is correct, these investments could evaporate, leaving massive losses and economic disruption.
The divided expert opinion—with veterans like Burry and Grantham warning of a bubble while others tout AI’s transformative potential—reflects genuine uncertainty about whether current AI capabilities justify the astronomical valuations and spending levels. This debate will shape investment decisions, regulatory approaches, and the future trajectory of the technology sector for years to come.
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