• Michael Burry warns that AI-driven tech stocks are showing bubble-like signs, comparing the market to late 1999-2000.
  • He advises investors to cut tech exposure, raise cash, and avoid aggressive shorting, which he deems too risky for most.
  • Burry's caution comes as mega-cap tech valuations stretch on AI hype, with capital expenditure outpacing earnings.

Burry sounds alarm on AI bubble

Michael Burry, the investor famed for predicting the 2008 financial crisis, is warning that current markets are flashing bubble-like signals, driven by artificial intelligence hype and momentum trading. In a recent interview, he urged investors to reduce their tech stock exposure and reject greed, advising instead to raise cash and avoid aggressive bets like shorting, which he called too risky and costly for most retail participants.

Burry sees parallels between today's environment and the late 1999-2000 dot-com bubble, arguing that valuations in the tech sector have become stretched beyond fundamentals. “The AI narrative is powerful, but the pricing of many of these names assumes perfection,” he said, according to people familiar with his remarks. He noted that a few mega-cap names are propping up indices, but if capital expenditure doesn't translate into commensurate earnings, a sharp repricing could follow.

Context and market signals

The warning comes amid a period where tech indices have shown strength on flagship earnings and AI-related headlines, yet analysts point to fragility beneath the surface. Burry’s own 13F filings have reflected a shift toward cash and hedged positions, reducing exposure to high-growth names. He emphasized that the current conditions resemble late-stage exuberance, where spending on AI infrastructure may outrun near-term profitability.

“Investors should focus on risk management now, not chase momentum,” Burry said, adding that the “easy money” has been made. He declined to predict a specific crash timing but warned that volatility is likely as sentiment shifts.

Attempts to reach Burry for further comment were unsuccessful.

Correction: An earlier version of this article misstated Burry's stance on shorting. He advises against it for most investors, not all.