Big Short investor Michael Burry warns of similarities between AI boom and dot-com bubble | Latest Tech News
Famed investor Michael Burry is warning that the current rush to pour billions of {dollars} into artificial intelligence bears eerie similarities to the dot-com bubble of the early 2000s.
“History is not a perfect guide, but I see so many indicators both technical and fundamental lining up for the same conclusion,” Burry wrote on his subscriber-only “Cassandra Unchained” Substack web page, according to Business Insider.
He added, “1999 went where no market had gone before, and I would say so can this one. It is already there on a number of indicators.”
Michael Burry was made well-known in the movie “The Big Short.” WireImage
Burry, who rose to prominence after his guess against the subprime mortgage market was featured in “The Big Short,” pointed to evidence that an more and more large quantity of junk-bond debt and enterprise capital money is pouring into the AI sector.
“High yield debt at 38% today vs 40%-50% back then belies the idea that today’s AI debt issuance is cleaner, backed by more profitable companies today,” Burry added.
Big Tech giants Amazon, Google, Microsoft and Meta have collectively said they may spend an estimated $700 billion on AI development this yr alone. Meanwhile, personal equity corporations have poured huge sums into firms like OpenAI.
In his notice to subscribers, Burry wrote that investments in firms that have yet to turn into profitable are a big half of the issue.
“We should remember VCs are funding loss-make companies like never before in history, and much more than in 1999,” he wrote.
Burry is well-known for his bleak predictions about the state of the US economic system, warning a number of occasions in current years about a looming recession and even choosing a battle with Elon Musk’s Tesla, which he described in December as “ridiculously overvalued.”
His contrarian views have earned lots of critics, including Palantir boss Alex Karp, who said late last yr that Burry was “bats–t crazy” after the investor disclosed that he had a guess against AI chip giant Nvidia.
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