Famous short seller Michael Burry has once again warned about an artificial intelligence (AI) bubble, predicting that the AI market could collapse within the next two years, following a similar pattern to the dot-com frenzy of the early 2000s.
In a rare interview with author Michael Lewis on the podcast “Against The Rules: The Big Short Companion,” Burry — who accurately predicted the 2008 housing crisis — shared his characteristically pessimistic view of today’s technology market.
“What you see in every previous bubble is that the stock market peaks before even half of the capital spending is completed,” Burry explained. “In most cases, capital spending hasn’t even reached its peak.”
According to the veteran investor, this pattern mirrors the early 2000s, when tech stocks peaked long before companies actually completed their investments in internet technology.
Burry specifically singled out Palantir and similar firms, arguing that they are merely offering “consulting” around AI instead of developing real technology — making their sky-high valuations difficult to justify.
“I think this whole thing is going to collapse,” Burry said. “It’s going to be very hard to stay long U.S. equities and protect yourself.”
Burry — who recently shut down his hedge fund Scion Asset Management to focus on writing on Substack — advised investors to sell the stocks that have soared during this rally.
Regarding Palantir, Burry believes the stock will plunge from current levels. The company has seen “massive” growth, rising 130% in 2025 and 2,100% over the past three years.
A collapse unlike the dot-com era
Burry warned that the coming crash will be more severe and prolonged than the dot-com bubble. The main reason, he says, is that many everyday investors now invest passively through index funds and ETFs that are heavily concentrated in AI stocks.
This means that when the bubble bursts, the domino effect will spread more widely and impact far more retail investors than before.
Instead of investing in AI, Burry recommends shifting to the healthcare sector, which he describes as “truly out of favor.” Statistics support this view: healthcare stocks have risen only 11% over the past three years, compared to a 68% increase for the S&P 500.
Beyond AI, Burry also criticized Bitcoin, calling the cryptocurrency the “tulip bulb of our time” and stressing that “it’s worse than tulips because it has enabled so much criminal activity.”
His remarks come as Bitcoin recently surpassed $92,500 following a period of sharp volatility.
Given his track record of accurately predicting the 2008 housing crash — later depicted in the film “The Big Short” — Burry’s latest warning about an AI bubble is drawing close attention from investors worldwide.
At a time when tech valuations are at record highs and many experts are questioning the sustainability of the current AI boom, the views of this “short-selling legend” may significantly influence market sentiment in the months ahead.
Leave a Reply