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Is Michael Burry Right About the AI Bubble?

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Want to see the thesis?

The AI Industry Needs 18x More Revenue – Every Year, Forever

JPMorgan · November 2025
Our biggest fear would be a repeat of the telecom and fiber buildout experience, where the revenue curve failed to materialize at a pace that justified continued investment.
$34.72/mo

Closing the gap = charging every iPhone user $34.72/month, permanently.

Source: JPMorgan

$5B+ losses

OpenAI lost $5B+ in 2025. It projects $14B in losses for 2026. Most of that $37B in AI revenue? Generated at a loss.

Sources: Deutsche Bank, company disclosures

92%

AI infrastructure investment accounted for 92% of US GDP growth in H1 2025. What happens when it stops?

Source: Harvard economist Jason Furman

These numbers move every week. In 2008, the warning window lasted 4 months. Don't miss the signal that moves first

LLMs Are a Breakthrough – But Breakthroughs Don't Guarantee $650B

The technology is real. The math isn't.

What AI Delivers Today
  • Coding assistants saving developers hours per week
  • Enterprise search across millions of documents
  • Automated customer support and content generation
  • Real productivity gains across Fortune 500 companies

$37B

Current generative AI industry revenue (2025)

What the Capex Needs
  • Adoption rates exceeding the smartphone
  • New software markets worth hundreds of billions that don't exist yet
  • AGI-level capabilities, a step-change no one has shipped
  • Revenue growth sustained indefinitely

$650B/yr

Revenue needed to justify current AI capex (JPMorgan)

Yann LeCun– Turing Award winner, Head of Meta AI
“Current LLMs are not able to plan, reason, or think critically. They are fundamentally limited in ways that scaling will not fix.”

Meta's own head of AI research says the next step-change requires a different approach than what that $125B is buying.

2 for 2Dot-com bubble, housing crisis
Michael Burry– January 12, 2026
“Almost all AI companies will go bankrupt, and much of the AI spending will be written off.”

The investor who shorted the 2008 housing market sees the same pattern in AI infrastructure spending.

The capex is priced for a future the technology hasn't reached yet. The gap doesn't close with incremental adoption – it requires either a step-change or adoption rates that exceed the smartphone.

Michael Burry Is Warning Again – And the Numbers Are Starting to Agree

2005 – Housing
  • Debt-fueled construction boom
  • Assumption: prices never fall
  • Banks didn't understand their exposure
  • Exotic instruments hid the risk

Burry shorted it. The rest of the market took two more years to notice.

2026 – AI Infrastructure
  • $600B in annual capex
  • Assumption: demand will justify the buildout
  • Hyperscalers extending depreciation schedules
  • $14B in projected losses at OpenAI alone

The same pattern. Different asset class.

Michael Burry
All the capital being spent and lent by the richest companies on earth will not buy enough time – by the very definition of mania.

January 21, 2026

Capex Surge Comparison: 2008 Housing vs 2024-2026 AI

The Hidden Accounting

GPUs have a 2-3 year product cycle. Hyperscalers are depreciating them over 5-6 years – extending their useful life to suppress expenses and inflate reported earnings. Burry estimates this earnings overstatement will understate costs by $176 billion across the Big Five from 2026-2028.

$176B hidden depreciation costs

Michael Burry
Massively ramping capex through purchase of Nvidia chips/servers on a 2-3 yr product cycle should not result in the extension of useful lives... Yet this is exactly what all the hyperscalers have done.

November 10, 2025

Oracle

5-6 years vs 2-3 years standard

26.9%
Meta

5-6 years vs 2-3 years standard

20.8%
Microsoft

5-6 years vs 2-3 years standard

~15%
Google

5-6 years vs 2-3 years standard

~12%
Amazon

5-6 years vs 2-3 years standard

~10%

Source: Burry's estimates from public 10-K filings

This Has Happened Before

In 2008 it was housing. In 2026 it's data centers.

The AI Debt Machine
$200B+AI-related debt issuance in 2025

BofA, industry reports

$75BHyperscaler bond issuance in Sep–Oct 2025 alone – 2x the annual decade average

BofA Securities

$121BTotal hyperscaler bond issuance in 2025 – 4x the five-year average of $28B/yr

BofA Securities

$30-40B/yrProjected data center securitization in 2026-2027

JPMorgan

7-10%Projected data center share of structured credit issuance by 2026-2027

JPMorgan

$27.2BMeta off-balance-sheet data center financing with Blue Owl

CNBC

$14BCoreWeave debt – 9x EBITDA leverage, 62% single customer, 0.17x interest coverage

SEC filing (S-1)

Oliver Wyman
In 2008, banks discovered they owned far more US housing risk than their internal reports suggested. They might soon discover the same about data-center and digital infrastructure risk.

Where We Are in the Cycle

Two views of the same question. Where the score has been – and where this pattern has gone before.

Composite Score – 30 Day Lookback (Free)
Historical Capex Bubbles vs AI (Indexed)
Michael Burry
If he had one failing in the dot-com cycle, it was being early... The housing bubble? It was being early.

December 28, 2025

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