Michael Burry Warns AI Bubble is 'Too Big to Save'

Michael Burry, the contrarian investor famous for predicting and profiting from the 2008 housing market collapse, has issued a stark warning regarding the current artificial intelligence boom. In a series of posts on social media, Burry characterized the AI sector as a bubble of such epic proportions that it threatens to bring down the entire market and economy when it inevitably bursts.

The investor, who recently pivoted from running a hedge fund to writing on Substack, argued that the federal government will likely attempt to intervene to save the market. However, he delivered a sobering conclusion: the problem is simply too big to save. This warning arrives at a time when the world's largest technology companies are investing trillions of dollars into AI infrastructure, creating a complex financial landscape that has divided experts on the future of the sector.

Burry's comments were made in direct response to a post by George Noble, a former hedge fund manager and ex-assistant to famed investor Peter Lynch at Fidelity. Noble had written that "OPENAI IS FALLING APART IN REAL TIME," citing the ChatGPT maker's fierce competition from Google's Gemini 3, soaring costs, widening losses, and a lawsuit from Elon Musk.

Responding to these challenges, Burry wrote on X late Tuesday:

The government will pull out all the stops to save the AI bubble to save the market to save the economy. The problem is too big to save.

He further elaborated that the vast sums "being spent and lent by the richest companies on Earth will not buy enough time—by the very definition of mania." Burry emphasized that he believes this situation is not surprising and will not end with OpenAI alone, suggesting a systemic issue across the industry.

Burry reserved specific criticism for OpenAI, the company behind ChatGPT. In his first Substack post, he targeted the company's "dreamy" spending target of $1.4 trillion over eight years. Despite OpenAI's impressive revenue growth—from $2 billion in 2023 to more than $20 billion last year—Burry remains skeptical of its financial sustainability.

The investor drew a direct parallel between OpenAI and the dot-com era, offering a grim comparison:

OpenAI is the next Netscape, doomed and hemorrhaging cash.

Burry, who has previously expressed surprise that the startup "kicked off a multi-trillion-dollar infrastructure race," stated that he would short OpenAI if it were a public company. His analysis suggests that despite the company's rapid revenue growth, its massive spending and competitive pressures place it in a precarious position similar to early internet companies that eventually failed.

The scale of the AI investment bubble extends far beyond a single company. Currently, America's eight most valuable public companies are all technology titans betting heavily on artificial intelligence. These companies include Nvidia, Alphabet, Apple, Microsoft, Amazon, Broadcom, Meta, and Tesla.

Each of these corporations holds a market capitalization exceeding $1 trillion, with their combined value reaching north of $22 trillion. This concentration of wealth and investment in a single technological sector creates a systemic risk that Burry believes is comparable to the 2008 financial crisis. The federal government previously stepped in to save banks deemed "too big to fail," a decision that drew widespread criticism. Burry's warning implies that the AI sector has become "too big to save," potentially leaving the government with limited options if the bubble pops.

Opinions on the AI boom remain sharply divided among financial experts. Burry's pessimistic outlook aligns with that of Jeremy Grantham, a veteran investor and bubble historian. Grantham recently stated that the "probabilities that AI will not bust are slim to none," reinforcing the view that the current valuations are unsustainable.

In contrast, other prominent investors remain bullish on the sector's long-term potential. Kevin O'Leary, star of "Shark Tank," and tech investor Ross Gerber have expressed confidence in AI's ability to drive economic growth. They argue that artificial intelligence is supercharging productivity and fueling rapid growth, suggesting that the technology's fundamental value justifies the high valuations. This split in expert sentiment highlights the uncertainty surrounding the sector's future.

Michael Burry's warning serves as a cautionary signal to investors and policymakers navigating the current technology landscape. His track record of predicting the 2008 housing crash lends significant weight to his analysis, even as other investors remain optimistic about AI's transformative potential.

As the debate continues between those who see a revolution and those who see a mania, the actions of the world's largest companies suggest that the stakes have never been higher. With trillions of dollars at play, the coming months will be critical in determining whether the AI boom represents a sustainable technological shift or a bubble destined to burst.