The Man Who Called 2008 Now Warns AI Market Faces a Reckoning

Michael Burry has made his boldest market call in over a decade: the artificial intelligence sector is living on borrowed time. The investor who profited enormously from predicting the 2008 housing collapse has positioned himself against two of the market’s most celebrated companies—Nvidia and Palantir Technologies—arguing that their combined $5 trillion valuation masks fundamental problems beneath the surface.

The Setup: A Familiar Pattern Emerges

Burry’s thesis centers on a striking historical parallel. He contends that today’s AI rally mirrors the dot-com bubble not in name, but in nature. “It was a data-transmission bubble,” he explained during an appearance on Michael Lewis’s podcast, drawing a distinction that reveals his analytical approach: the problem isn’t artificial intelligence itself, but rather the market’s disconnection from economic reality.

His wagers are considerable in scale but modest in initial size. Burry deployed approximately $10 million in put options against the two companies, positions that could explode into over $1 billion in value if the stocks fall as dramatically as he anticipates. He’s betting Nvidia declines roughly 37% to around $110 per share by 2027, while Palantir drops to $50 from its current $200 range.

The Accusation: Hidden Fragility in the Boom

For Palantir, Burry’s complaint focuses on structural vulnerabilities: excessive dependence on government contracts and executive compensation that strains the business model, combined with mounting pressure from established competitors like International Business Machines. The competitive landscape, he argues, is tightening in ways the market hasn’t fully priced in.

Nvidia faces different but related concerns in Burry’s analysis. He points to a complex web of financial arrangements where major customers—companies like Oracle and Meta Platforms—are receiving funding from Nvidia itself to purchase chips. This structure, Burry suggests, resembles the accounting maneuvers that enabled companies like Enron to artificially inflate vendor sales and profits. The arrangement creates what he views as an unsustainable feedback loop disguising actual demand.

Beyond deal structures, Burry has scrutinized the accounting practices around chip longevity and asset depreciation, suggesting that companies are extending the productive life of these expensive systems in ways that inflate short-term earnings. If confidence erodes and users write down asset values more aggressively, a cascading effect could trigger lower reported profits, stock price contractions, and reduced capital expenditure—ultimately crushing Nvidia’s growth trajectory.

The Backlash: Questions About Credibility

Nvidia has rejected these characterizations outright. “Our underlying business is economically sound, our reporting is complete and transparent, and we maintain our reputation for integrity,” the company stated in a memo, dismissing comparisons to historical accounting scandals. Palantir’s leadership responded more combatively, with CEO Alex Karp dismissing Burry’s analysis as extreme on financial media.

The skepticism extends beyond corporate responses. Burry’s track record over the past 15 years has been inconsistent. His January 2023 market warning proved premature—Silicon Valley Bank collapsed weeks later, but the S&P 500 has surged approximately 70% in the time since. He later acknowledged that call as a miscalculation, an admission that fuels questions about market timing precision.

Social media critics note a pattern: Burry has predicted numerous recessions that never materialized, and his past decade contains more false alarms than successful calls. This history makes observers hesitant to treat his current warnings as gospel.

The Real Question: Timing Over Truth

Michael Green, chief strategist at Simplify Asset Management, pinpoints the core tension in Burry’s methodology: “His failing wasn’t about being wrong, it was about being early.” During the dot-com era and housing bubble, Burry grasped the fundamental dynamics before they played out. The timing problem persists today.

Yet awareness of Burry’s short positions hasn’t destabilized the stocks significantly. If anything, Green suggests, market participants may have become more convinced of unlimited upside potential—a psychological shift that reinforces the very bubble dynamics Burry is attempting to exploit. Stocks have drifted lower since Burry disclosed his positions in November, but the movements remain choppy and inconclusive.

The Stakes: Newsletter and Credibility on the Line

After closing his hedge fund, Burry launched a newsletter called Cassandra Unchained, which attracted 171,000 paying subscribers at $379 annually—faster than most finance publications on Substack. The platform gives him direct access to an engaged audience and creates financial incentives around his market views, raising questions about whether conviction or commercial interest drives his current positioning.

His wager remains conditional: the bubble may exist, but when it bursts—and if his specific targets collapse as predicted—remains unknowable. That uncertainty, more than disagreement about the diagnosis, defines the real challenge to Burry’s latest contrarian bet.