Michael Burry has a diagnosis for Wall Street, and it is not a flattering one.
In an Oct. 5 post on X (the former Twitter), the investor made famous by “The Big Short” said the stock market is in the first stage of grief: denial.
Based on 2000 and 2008, he said that stage tends to last six to nine months. The market did not seem to be listening.
A day later, the S&P 500 closed at a fresh record. Oil prices eased after a G7 release of emergency reserves, then Treasury yields slipped.
That gap between Burry’s warning and the market’s mood is the whole debate in a nutshell.
Also read: Michael Burry’s blistering message on economic inequality
What Michael Burry’s stages of grief imply
Burry chose his comparisons carefully. He pointed to the dot-com bust of 2000 and the financial crisis of 2008 as his guide to how long the denial phase lasts.
Counting six to nine months from early October would put the next stage somewhere in the first half of 2027. In September, he had already said the AI bubble may burst sooner than he first thought.
He followed up with a pointed valuation jab. In a Substack note on Oct. 6, Burry calculated that Anthropic’s private-market value could buy 78 profitable companies in the S&P 500, including FedEx Freight and Lululemon.
He has doubted that price tag for months. In June, he said Anthropic was unlikely ever to be worth close to $1 trillion over the long term. He argued that computing power will eventually become a commodity, according to Business Insider.
The warning is not new. On May 8, the day the S&P 500 set a record, Burry wrote on Substack that the market felt like the last months of the 1999-2000 bubble.
He also said AI had come to dominate almost every conversation about stocks. He compared the chip index’s fast climb to the run-up before the March 2000 tech collapse.
His record cuts both ways. Burry’s fund made nearly $800 million betting against the U.S. housing market before 2008. But he also told investors to sell in January 2023 and later admitted that call was wrong.
Burry argued that the U.S. government is in its weakest position in modern history to fight a financial or debt crisis.Jim Spellman / Getty Images
Burry bets against the AI trade
Burry has put money behind his view. On July 2, he disclosed that he had shorted Micron. He called the memory maker a highly cyclical business with weak long-term returns on capital, according to Bloomberg.
Micron’s shares had soared in 2026. Burry blamed fear of missing out rather than fundamentals.
Micron was not his only target. He has also reportedly held short positions in Nvidia, Applied Materials, and the iShares Semiconductor ETF. He has said AI-related chip stocks could see a 30% correction.
In late September, he changed how he was betting. On Sept. 28, Burry replaced his short positions in Nvidia, Oracle, Palantir, Nebius, and Micron with put options, saying he was “moving timelines up.”
Put options gain value when a stock falls. Several of his run into late 2027.
His reasoning reaches beyond chips. Burry argued that the U.S. government is in its weakest position in modern history to fight a financial or debt crisis. He said the administration sees the AI buildout as the economy’s only real engine and cannot afford to let it fall.
The case against Burry
Not every “Big Short” veteran agrees. On the “New Money” podcast, Steve Eisman called Burry’s argument about AI chip depreciation “too academic.”
He said older chips are holding their value better than Burry assumes because demand for computing power remains strong, according to MoneyWise. CoreWeave, for example, has a contract for older Nvidia A100 chips that runs through 2029.
Eisman sees a different weak spot. In his view, much of the AI spending chain rests on the health of OpenAI and Anthropic. He said a failure at OpenAI could trigger a “massive correction.”
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He prefers suppliers of AI infrastructure, such as Nvidia and Micron, over the model developers themselves.
Wall Street’s numbers also push back on the bubble talk. Goldman Sachs expects AI investment to reach about 1.8% of U.S. GDP, which it considers within the range of past tech booms. Every stock Burry is betting against carries a Buy or Strong Buy consensus rating.
Timing is the other problem. Burry tends to be right about the diagnosis but early on the timing. Investor Paul Tudor Jones, who also sees echoes of 1999, has said the rally could run for another one to two years, according to CNBC.
What investors should watch
The Federal Reserve is the next test. In late September, prediction markets put the odds of another rate hike at the Fed’s Oct. 27-28 meeting at about 16%, following a quarter-point increase in September. A second hike would raise borrowing costs for companies and households alike.
Borrowing costs matter for the AI buildout in particular. The 10-year Treasury yield recently sat near its highest level since 2007, raising costs for data center builders. Oracle’s force majeure notice on a New Mexico data center project also unsettled lenders.
Burry’s broader worry is the spending itself. He has compared the AI investment cycle to the telecom overbuild of the late 1990s and questioned how long AI hardware really stays useful.Whether denial turns into something worse may depend on how long that spending can keep going.
Related: Michael Burry pulls an old playbook into the Nvidia fight