Known for having predicted the 2008 financial collapse, American investor Michael Burry has been betting that the same euphoria that led to the dot-com bubble in the 2000s is about to be repeated with artificial intelligence. This Sunday, in a publication on Substackhe recommended investors reduce their positions in technology stocks and “reject greed.”
Burry’s warning came after the S&P 500 hit a new all-time high, at the same time as consumer sentiment data fell to the lowest levels on record. For the investor, the market stopped reacting rationally to economic fundamentals.
“Stocks aren’t rising or falling because of jobs or consumer sentiment,” Burry wrote. “They’re going up because they’ve been going up. In a two-letter thesis that everyone thinks they understand… It feels like the last few months of the 1999-2000 bubble.”
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The “two-letter thesis” he refers to is, of course, AI.
Burry specifically pointed to the Philadelphia Semiconductor Indexwhich rose more than 10% in just one week and is expected to rise 65% in 2026. The movement in semiconductor share prices, according to him, precisely echoes what happened in the months before the dot-com bubble burst, in March 2000.
In November last year, the investor drew market attention for “betting against” the Nvidia. At the time, Burry’s hedge fund, the Scion Asset Managementpositioned itself with the equivalent of US$ 1 million in put options for the company, after the AI chip giant became the first company in the world to reach US$ 5 trillion in market value.
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The internet bubble
The Dotcom Bubble, also known as the Internet Bubble, was a speculative phenomenon that developed between the mid-1990s and early 2000s, driven by the arrival of the commercial internet and the belief that the global web would transform business forever.
Investors and venture capital funds poured money into digital startups at a frantic pace, often without requiring any proof of financial viability — all it took was a website and a vague business plan to raise millions. The Nasdaq, an index dominated by technology companies, jumped more than 400% between 1995 and its peak in March 2000. Companies that had never recorded a penny of profit were, on paper, worth more than century-old industrial giants.
When it became clear that most of these companies would never generate real returns, confidence quickly evaporated. The index plummeted 78% over the next two years, wiping out about $5 trillion in market value. Companies like Pets.com, which even advertised at the Super Bowl, closed their doors in a matter of months. Others, like the Amazon and the Googlesurvived and became pillars of the digital economy, but even they saw their shares melt before recovering.
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What was the subprime crisis
To understand why Burry is taken seriously when he makes this type of warning, it is necessary to go back to the early 2000s. During that period, the United States experienced an accelerated expansion of real estate credit. Banks and financial institutions began to grant loans to property buyers with a bad credit history (so-called subprime clients) often without requiring proof of income or down payment.
These high-risk loans were then packaged into complex financial products and sold to investors around the world as if they were safe assets. Risk rating agencies gave high marks to these packages, and the market, seduced by the continuous appreciation of properties, did not question them.
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When prices stopped rising and defaulters started not paying, the house of cards collapsed. Traditional banks, insurance companies and investment funds, all interconnected by these financial instruments, suffered catastrophic losses. THE Lehman Brothers it crashed in September 2008. Credit dried up. The crisis spread across the world and plunged the global economy into the worst recession since the Great Depression of the 1930s.
The Big Bet
While Wall Street was celebrating real estate gains, Michael Burry, a doctor by training, spent months reading prospectuses for mortgage-backed securities. What he found was alarming: the contracts were full of clauses that guaranteed borrowers would pay low interest rates for two or three years, but that would then skyrocket, making the installments unpayable for millions of families.
Burry concluded that the system was doomed. In 2005, when no one was still talking openly about the crisis, he approached the biggest banks on Wall Street and asked them to buy what he called “credit default swaps”, a type of insurance against the default of real estate bonds. The bankers laughed. They thought he was throwing money away.
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His own clients were furious when they realized he was betting against the rising market. Many tried to withdraw their investments. Burry resisted. When the bubble burst, its bottom, the Scion Capitalprofited more than US$700 million dollars. He personally pocketed about $100 million.
Burry’s trajectory hit the screens in 2015 with the film The Big Short (The Big Short), directed by Adam McKay and based on the book of the same name by Michael Lewis. The character of Michael Burry was played by Christian Bale.
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