Michael Burry Warns Of AI Bubble, Cites Warren Buffett's Past Retail Misstep

"Big Short" Michael Burry, the investor who famously bet against the US housing market during the 2008 financial crisis, has issued a warning about an impending AI bubble burst. Burry Criticizes Tech Giants In a recent Substack exchange, Burry expressed concerns over the current tech boom, likening it to a past department store rivalry. According to a Business Insider report, Burry criticized major tech companies like Microsoft Corp. (NASDAQ:MSFT) and Alphabet Inc. (NASDAQ:GOOGL) (NASDAQ:GOOG) for their heavy investments in AI infrastructure, which he believes will soon become obsolete. Burry drew parallels to Warren Buffett‘s experience with Hochschild-Kohn, a department store that failed to gain a competitive edge despite costly upgrades. He warned that similar outcomes could occur with AI investments, where competitors match advancements, negating any advantage. Predicts Downturn In Tech Industry He further predicted a prolonged downturn in the tech industry, suggesting that employment levels may stagnate or decline. Burry also highlighted surprises in the AI sector, such as Google’s struggles and Nvidia Corp.‘s (NASDAQ:NVDA) continued dominance. Burry raised concerns about AI’s impact on jobs, questioning the notion that trade careers are immune to AI disruption. He also suggested that reliance on AI tools could lead to a decline in human expertise, particularly in fields like medicine. Burry’s Past Warnings Burry’s warnings come amid a series of critiques he has made against tech giants. Recently, he criticized Meta Platforms Inc. (NASDAQ:META) for its massive AI capacity initiative, suggesting it could harm the company’s return on invested capital. In another instance, Burry bet against Nvidia, questioning the feasibility of the AI chip boom. He argued that the market’s current valuation does not align with the actual application layer use cases, indicating potential overvaluation. Burry’s concerns extend beyond individual companies. He has expressed regret for not being more vocal about the risks leading up to the 2008 financial crisis, which has influenced his current stance on the AI bubble. Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Photo courtesy: Shutterstock