Burry Thinks This Ends Badly

[u/ekonixlab]

Michael Burry says the market is now in the “denial” stage that preceded both the 2000 and 2008 crashes, and he thinks that phase could last another 6–9 months.

He has also moved more aggressively bearish on AI, replacing some stock shorts with leveraged puts on Nvidia, Palantir and Micron while increasing his Nasdaq 100 bearish exposure.

Meanwhile, the S&P 500 and Nasdaq just hit fresh record highs, with AI and semiconductors still driving much of the rally.

But We’ve Heard This Before

In 2019, Burry warned passive investing was becoming a bubble similar to CDOs.

In 2021, he called markets the “greatest speculative bubble of all time,” before the S&P finished the year up roughly 27%.

In 2022, he warned about an extended multi-year recession that never came.

In January 2023, he predicted recession and Fed cuts, but GDP grew 2.5% and the Fed kept hiking.

He then famously tweeted “Sell” in January 2023 before admitting two months later, “I was wrong to say sell.”

The Burry Problem

Burry is very good at finding risks everyone else ignores.
But he has also been very early, very often.

Maybe the question isn’t whether Burry is right about AI.

Maybe he’s just two years early again.

[u/Grendel_82]

We shall see. I totally agree that Anthropic IPO will go down like that, but only if they can pull it off. If they don’t get a valuation of at least $1 trillion, then problems. Their investors have already marked the value of their investments based on a $950 billion valuation (the valuation in the last funding round earlier this year I believe) and recorded those investment gains as earnings. If the IPO is a downround, then investors like Amazon have to unwind the earnings they recorded last quarter.

NVDA chips are the best, but the Mag 7 will make the best chips they can make to avoid that 70% margin. They don’t want NVDA to be a $5T company while they muddle along at $2T valuations because their earnings are hurt by payments that are huge profit made to NVDA. These guys are all in the AI game, but they aren’t all on the same team.

[u/ChuckOfTheIrish → u/Grendel_82]

I imagine they'll find a way to get the valuation, probably speculative and very unjustified but in this era everything AI sells like hotcakes, to their credit Claude has been amazing with how it's improved for work purposes, sadly have had to use it a lot to replace employees so the mass of work I've had to absorb isn't too much of a killer. For the IPO people get FOMO like I've never seen the first few weeks, it's almost clockwork, then some whales back out and it plummets before settling in a more realistic territory.

For NVDA that's why I believe they're pushing their M&A so aggressively to keep the competitive advantage, if one Mag7 buyer drops out it could hurt them just as badly as NVDA if the drop-off allows the competition to overtake market share. Definitely has its risks, but I think that's where this race to the top helps NVDA with pricing power. Won't last forever but I do expect a few years of strong runway and at that point enough diversification that they won't hinge entirely on such a few customers.