When Will the AI Bubble Pop? Michael Burry's $1 Billion Warning

The echo of 2008 is back. Michael Burry, the investor who famously called the housing crisis, is now sounding the alarm on artificial intelligence stocks. His latest move? Nearly $1 billion in bearish put options targeting AI heavyweight companies like Nvidia and Palantir. This isn’t just another market bet—it’s a stark signal that some seasoned investors believe the AI rally has overextended.

The $1 Billion Short Position Against AI Leaders

According to Q3 2025 filings, Michael Burry has accumulated put options worth close to $1 billion, specifically targeting AI-focused firms. The positioning reveals deep skepticism about current AI valuations, particularly around companies heavily invested in hardware infrastructure. Burry’s Twitter commentary emphasized a critical concern: the AI industry is built on hollow demand foundations, with most “customers” dependent on venture capital funding rather than genuine market pull.

Nvidia’s leadership pushed back, touting strong revenue forecasts and deployment metrics. Yet the counterargument hasn’t dampened market chatter about whether current AI stock prices reflect reality or hype.

Drawing Parallels to the Dot-Com Era

Burry’s bold wager inevitably resurrects memories of the late-1990s tech crash. Back then, countless internet startups commanded astronomical valuations despite minimal revenue or sustainable business models. The parallel is uncomfortable: today’s AI sector shows similar characteristics—explosive growth narratives, sky-high multiples, and an ecosystem partly propped up by speculative capital.

The difference, some argue, is that AI has tangible applications. Others counter that most applications remain unprofitable and unproven at scale. Burry seems to belong to the latter camp.

What This Means for the Market

Michael Burry’s positioning doesn’t directly impact cryptocurrency markets, but it reflects broader investor anxiety about tech valuations across sectors. His bet raises legitimate questions: Are AI stocks pricing in realistic economics? Will a valuation reset trigger broader market turbulence?

Institutional investors are watching closely. If the AI sector experiences significant correction, the shockwaves could extend far beyond software and semiconductor stocks. The risk reassessment may have only just begun.