‘Big Short’ investor Michael Burry warns of – Business News
Famed investor Michael Burry is warning that the present 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, in line with 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 within the movie “The Big Short.” WireImage
Burry, who rose to prominence after his wager in opposition to the subprime mortgage market was featured in “The Big Short,” pointed to proof that an more and more great amount 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 stated they are going to spend an estimated $700 billion on AI development this 12 months alone. Meanwhile, personal equity companies have poured huge sums into corporations like OpenAI.
In his observe to subscribers, Burry wrote that investments in corporations which have but to grow to be profitable are a huge 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 concerning the state of the US financial system, warning a number of occasions in recent times about a looming recession and even choosing a struggle with Elon Musk’s Tesla, which he described in December as “ridiculously overvalued.”
His contrarian views have earned lots of critics, together with Palantir boss Alex Karp, who stated late final 12 months that Burry was “bats–t crazy” after the investor disclosed that he had a wager in opposition to AI chip giant Nvidia.
