Michael Burry, the short seller who inspired the film "The Big Short," issued a stark warning about the artificial intelligence-driven stock market rally, comparing the current conditions to those just before the 2000 dot-com bubble collapse.
Burry said on social media Saturday that he was "listening to economic broadcasts during a long drive, and it was all about AI," according to the online newsletter platform Substack and CNBC.
"The recent stock market doesn't react to employment indicators or consumer sentiment," he said. "It simply continues to rise just because it has been rising." He added, "People mistakenly believe they understand the two letters 'AI,' and it feels like watching the final month of the bubble transitioning from 1999 to 2000."
Burry compared the recent surge in the Philadelphia Semiconductor Index to the period just before the 2000 tech stock crash. The index, which tracks major companies including Nvidia, Broadcom, Intel, Micron, and TSMC, has climbed about 40% over the past month. Share price gains have been particularly large for traditional central processing unit (CPU) and memory chip makers such as Intel, AMD, and Micron. Buoyed by this semiconductor strength, the Standard & Poor's 500 Index and Nasdaq Composite both hit new record highs that day, shrugging off Middle East geopolitical tensions.
Other hedge fund heavyweights have raised similar concerns. Paul Tudor Jones, founder of Tudor Investment, warned in a CNBC interview the previous day that "the stock market bull run riding the AI boom could last another one to two years," but cautioned that "when the rally ends, the decline in stock prices will be substantial." He noted that the current mood in the New York stock market resembles 1999, a year before the dot-com bubble peaked.
Burry is known for predicting the 2008 U.S. subprime mortgage crisis and reaping massive profits through short selling. His story was dramatized in the 2015 film "The Big Short." He has consistently argued that a bubble has formed in the AI industry and that its collapse is imminent.
Wall Street, however, has responded cautiously to his remarks. While he successfully predicted the 2008 crisis, his subsequent bearish calls have repeatedly missed the mark. When Burry raised concerns about a Tesla stock bubble in 2021, Tesla CEO Elon Musk mocked him as "a broken clock."
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