Michael Burry, the legendary investor famous for predicting the 2008 financial crisis in “The Big Short,” has issued a stark warning about the current AI bubble while cautioning that its timing remains impossible to predict. In a lengthy post on his paywalled Substack “Cassandra Unchained,” Burry addressed reader questions and elaborated on his concerns about the artificial intelligence investment frenzy.
Burry emphasized that “there is no way to time or predict” when the AI bubble will burst, noting that it may still have significant room to grow before reaching its peak. He warned that the stock market could be entering “a blow off top of extreme magnitude on the upside” while simultaneously capable of “making a generational top” at any moment. The investor stressed that shorts are typically short-term trades lasting less than a year or a couple of years at most—not 5 or 10 years.
A central theme in Burry’s analysis is what he calls “supply-side gluttony”—massive data center buildouts, GPU orders, and multibillion-dollar commitments occurring without corresponding real end-user demand. He argues that investors are mistaking this supply-chain activity for genuine market demand, with much of the hype being driven by Nvidia CEO Jensen Huang’s marketing prowess.
Burry specifically targeted Nvidia, comparing the chipmaking giant to Cisco during the dot-com bubble—a company whose stock plummeted over 75% during the crash. This isn’t Burry’s first criticism of Nvidia; in November, he posted charts on X showing circulatory investment deals between Nvidia and other tech giants, questioning the sustainability of the AI infrastructure boom.
Nvidia pushed back against Burry’s claims in a note to Wall Street analysts in late November. During the company’s Q3 earnings call, CEO Huang directly addressed bubble concerns, stating: “From our vantage point, we see something very different. We excel at every phase of AI, from pre-training and post-training to inference.”
Burry advised investors that “it is prudent neither to short stocks nor to buy puts on stocks,” noting that obviously overvalued stocks tend to have the most upward momentum while their puts remain very expensive. He predicted that even when the market finally tops, it won’t be for any specific reason, and if an AI buildout bubble does pop, it likely won’t be apparent until a year or two later.
Key Quotes
I believe today the stock market is in a phase that could become a blow off top of extreme magnitude on the upside, while at any time, maybe even today or tomorrow, making a generational top.
Michael Burry issued this warning in his Substack post, suggesting that while the market could continue surging dramatically, it could also peak at any moment, creating a precarious situation for investors.
Even when it finally tops, it will not be for any specific reason. Even if the reason is an AI buildout bubble popping, that will likely not be apparent until a year or two later.
Burry explained that market tops are often only recognizable in hindsight, meaning investors won’t know the AI bubble has burst until well after the fact, making it nearly impossible to time exits effectively.
Mostly, it is prudent neither to short stocks nor to buy puts on stocks. Stocks that are obviously overvalued tend to have the most upward momentum yet have puts that are very expensive.
Despite his bearish outlook, Burry advised against betting against the market, acknowledging that overvalued stocks can continue rising and that the cost of shorting makes it an impractical strategy.
From our vantage point, we see something very different. We excel at every phase of AI, from pre-training and post-training to inference.
Nvidia CEO Jensen Huang responded to bubble concerns during the company’s Q3 earnings call, defending the company’s position and arguing that their comprehensive AI capabilities justify current valuations.
Our Take
Burry’s analysis reveals a fascinating paradox in today’s AI market: a bubble that everyone can see but no one can time. His concept of “supply-side gluttony” is particularly insightful—it suggests that the AI boom may be more about infrastructure companies selling to each other than genuine end-user adoption. The Cisco comparison is chilling for Nvidia investors, as it implies that even market leaders can suffer catastrophic declines when bubbles pop. What’s most striking is Burry’s admission that even he won’t short this market, suggesting the momentum is too powerful to fight. This creates a dangerous situation where investors know valuations are stretched but feel compelled to stay invested for fear of missing further gains. The real question isn’t whether there’s a bubble, but whether the underlying AI technology will ultimately justify today’s investments—something we may only know years from now.
Why This Matters
Burry’s warning carries significant weight given his track record of identifying major market bubbles before they burst. His analysis highlights a critical tension in today’s AI investment landscape: the disconnect between massive infrastructure spending and actual end-user demand. This “supply-side gluttony” could represent trillions of dollars in potentially misallocated capital across data centers, GPU manufacturing, and AI infrastructure.
The comparison to the dot-com bubble is particularly relevant, as it suggests that even legitimate technological revolutions can experience devastating corrections when valuations outpace reality. For businesses and investors, this creates a challenging environment where the AI boom appears unstoppable yet potentially unsustainable. The fact that even a seasoned short-seller like Burry advises against betting against the market underscores how difficult it is to position portfolios in this environment. His warning that the bubble’s burst may only be recognizable in hindsight suggests that many investors, companies, and workers could be caught unprepared when sentiment shifts, with profound implications for the broader technology sector and economy.
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Source: https://www.businessinsider.com/michael-burry-big-short-ai-bubbles-burst-cannot-be-predicted-2025-12