URGENT UPDATE: Notable investor Michael Burry, known for predicting the 2008 financial crisis, is sounding alarm bells over the burgeoning AI bubble, declaring it “too big to save.” In a recent post on X, Burry warns that the impending collapse of this bubble will have devastating effects on the stock market and global economy.
The investor’s stark warning comes as concerns mount regarding challenges faced by OpenAI, the creator of ChatGPT. Burry responded to a post by former hedge fund manager George Noble, who highlighted OpenAI’s escalating struggles, including intense competition from Google’s Gemini 3, soaring operational costs, and a lawsuit from Elon Musk.
Burry stated, “The government will pull out all the stops to save the AI bubble to save the market to save the economy,” but emphasized that “the problem is too big to save.” He points to the vast amounts of capital being poured into AI by the world’s wealthiest companies, suggesting it won’t be enough to stave off a significant downturn. Burry added that this situation is not isolated to OpenAI, calling it “the next Netscape, doomed and hemorrhaging cash.”
The investor’s concerns reflect a broader skepticism regarding the sustainability of the AI boom. As of October 25, 2023, OpenAI’s revenue has reportedly surged from $2 billion in 2023 to over $20 billion, but Burry warns this rapid growth is characteristic of a speculative mania.
Burry has previously expressed his belief that the AI race is leading to a “multi-trillion-dollar infrastructure race” that echoes the dot-com bubble’s rise and fall. He noted that America’s eight most valuable public companies—Nvidia, Alphabet, Apple, Microsoft, Amazon, Broadcom, Meta, and Tesla—are heavily invested in AI, collectively valued at over $22 trillion.
The federal government intervened during the 2008 financial crisis, bailing out banks deemed “too big to fail,” a move that received significant backlash. Now, experts are divided over whether the current AI boom represents a revolutionary shift in technology or just a fleeting euphoria. Prominent investor Jeremy Grantham recently claimed that the odds of the AI bubble not bursting are “slim to none.”
As the conversation around AI intensifies, the implications of Burry’s warning resonate widely. Investors are urged to consider the potential risks involved in AI investments as the landscape evolves rapidly.
With Burry’s reputation for accurate predictions, his latest remarks are generating significant attention. As this story develops, the financial world is poised to watch closely for the impacts of the AI bubble and how it may shape the market in the coming months.
Stay tuned for more updates on this critical issue as it unfolds.
