Michael Burry, renowned for his role in “The Big Short,” has recently shifted gears by sharing his insights on various financial topics through his Substack newsletter, having previously maintained a cryptic presence on social media. After a notable hiatus, he re-emerged on X in late October to express his concerns regarding an impending bubble in the artificial intelligence sector. His observations highlight potential pitfalls within leading tech firms, indicating a slowdown in cloud-computing growth. He has criticized these companies for overinvesting in equipment, particularly Nvidia chips, and for excessive stock-based compensation practices, which he believes detract from long-term shareholder value.
Burry draws parallels between the current AI excitement and historical market bubbles, specifically likening the situation to the dot-com era and the housing crisis. He argues that the enthusiasm surrounding AI, exemplified by companies like OpenAI, could lead to a catastrophic outcome. He has made bearish bets against prominent market players such as Nvidia and Palantir, predicting the AI bubble may burst within two years. His advice to investors who have benefitted from these high-flying assets has been clear: cash out while possible.
With regard to cryptocurrencies, Burry has not held back on his criticism, dismissing Bitcoin’s current valuation as “the most ridiculous thing,” and comparing it unfavorably to a tulip bulb due to its association with criminal activities. Despite this, he revealed a long-term investment in gold dating back to 2005 and identified Google-parent Alphabet as a prime option for value investors in the tech landscape.
Burry’s insights extend beyond individual stocks to encompass broader economic concerns. He criticized the Federal Reserve for its historical missteps, asserting that it has inflicted significant damage since its inception. He suggested a reformation whereby interest rates and money supply could be managed more effectively by the Treasury. Adding to his warnings, he indicated that the U.S. banking system is becoming increasingly fragile, with banks showing signs of weakening at an alarming rate.
He has also revisited his own investment history, particularly the notable sale of GameStop prior to its infamous surge in early 2021, admitting he was unaware of what was to come. His personal investment portfolio reflects his insights, featuring companies like Lululemon, Molina Healthcare, and Shift4 Payments, often mirroring his hedge fund’s positions.
Through his Substack, titled “Cassandra Unchained,” Burry appears committed to providing candid financial commentary, signaling a departure from his previously enigmatic approach. His recent remarks suggest this may only be the beginning of his public discourse on financial matters.
