Michael Burry, the founder of Scion Capital, best known for accurately predicting the 2008 housing market crash, is betting against consensus again in 2025.,
Recent filings confirm he has built positions against two of the most celebrated winners of the AI boom – Nvidia (NASDAQ: NVDA) and Palantir Technologies (NASDAQ: PLTR).
While Wall Street continues to cheer their meteoric rise, Burry is signalling caution, suggesting the AI frenzy may be more bubble than breakthrough when it comes to sustainable profits.
Whether he’s right this time as well remains uncertain – but the following two arguments suggest Burry is raising legitimate concerns.
Burry’s top concern: AI spending isn’t translating into revenue yet
Michael Burry’s scepticism about the so-called AI boom is rooted in a mismatch between investment and returns.
His colleague Phil Clifton points out that while generative artificial intelligence tools like ChatGPT have captured global attention, the actual revenue streams remain modest.
OpenAI, for instance, is expected to generate just over $20 billion this year – a figure that pales in comparison to the nearly $400 billion that big tech firms are pouring annually into AI infrastructure.
The imbalance recalls the telecom boom of the early 2000s, when companies overbuilt fibre optic networks far beyond demand.
Burry believes the same dynamic is unfolding now for AI – massive spending without proof that revenues will catch up.
Burry sees the depreciation problem as proof that AI is a bubble
Another cornerstone of Burry’s thesis is the depreciation problem tied to Nvidia’s advanced chips.
Cloud giants are buying servers built around these chips, recording them as assets with a six-year lifespan.
The issue, according to Scion’s research, is that Nvidia releases new, more efficient chips every year, rendering older models outdated long before companies recoup their investment.
This creates a major contradiction: NVDA markets its latest GPUs as vastly superior, yet reassures customers that older ones remain valuable.
Burry sees this tension as unsustainable. If depreciation accelerates, customers may struggle to justify their spending, undermining the very demand that has propelled Nvidia stock to historic highs.
This time, Michael Burry isn’t alone
Back in 2008, Michael Burry’s warnings about the housing market collapse were largely dismissed until the crisis unfolded.
Today, his scepticism toward the AI boom appears to be resonating more quickly.
The sharp pullback in high-flying artificial intelligence stocks like Nvidia and Palantir this month suggests that other investors are beginning to question whether valuations have run too far, too fast.
Fund managers are increasingly voicing concerns that AI stocks are priced for perfection, with little margin for error if revenue growth fails to match the massive capital outlays.
Unlike his lonely stance during the mortgage bubble, Burry now finds himself joined by a growing chorus of sceptics who see signs of excess in the AI trade.
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