Michael Burry warns about the artificial intelligence bubble: the latest prophecy after 2008

Michael Burry, the financial analyst who correctly predicted the 2008 mortgage collapse, has taken an extraordinary position in derivatives markets that revives his warnings about speculative bubbles. After decades observing financial cycles, Burry is not only betting against Palantir but executing an asymmetrically favorable trade: he invested $9.2 million to gain rights to $240 million in potential gains, a mathematical return of 2,600% when his prediction materializes.

Michael Burry’s Strategy: Maximum Asymmetry Design

The financier presented 50,000 put option contracts with an unprecedented risk-reward structure. While Palantir trades at $184, the valuation Burry considers viable is $50. This difference reflects his conviction of a severe correction in the tech sector. To understand the magnitude, consider that Palantir has generated gains of 449 times since its IPO, an appreciation Burry considers unsustainable given the underlying fundamental metrics.

The pattern is identical to what he identified years ago: overvalued assets supported by speculative narratives rather than real cash flows. NVIDIA, a leader in the artificial intelligence revolution, faces a different challenge: it has invested huge resources in chip infrastructure that Burry considers obsolete in 36 months, with depreciations extended over 10 years, creating significant accounting distortions.

Palantir, NVIDIA, and the AI Collapse: The Numbers Behind the Warning

Big tech corporations spent $200 billion in 2025 building infrastructure dedicated to artificial intelligence. However, revenue growth linked to these investments hovers around just 20%, a mismatch suggesting questionable efficiency. The energy costs associated reach magnitudes capable of powering entire nations, while depreciation accounting hides $176 billion in adjustments through 2028.

Michael Burry compares this situation to Enron’s accounting mechanisms and the mortgage derivatives of 2008. The cosmetic difference is that back then it was subprime CDOs; now it’s presented as AI infrastructure. Under both masks lies the same dynamic: disproportionate investment, insufficient returns, and extreme financial leverage.

The Repeated Pattern: From the 2008 Crisis to Today’s Tech Bubble

During the last crisis, Michael Burry took 18 months to see his predictions validated. When finally proven correct, he had generated $100 million in gains, but the emotional toll nearly broke him. This experience did not stop him; instead, it seems to have equipped him with pattern recognition that now leads him to identify vulnerabilities in the AI sector.

The tech sector experienced a 173% rise in 2025, driven largely by speculation about AI capabilities. However, infrastructure investment grows much faster than actual monetization, a classic indicator of overvaluation in speculative cycles.

Why Is Michael Burry Withdrawing from Public Markets?

On November 10, Michael Burry made an unprecedented move: he completely deregistered his fund from regulatory oversight. This act mirrors his disappearance from the public sphere in 2008, when the pressure of being contrarian in a bull market affected him significantly. Without public statements or defending his position, he stepped away from managing outside money.

His only gesture was a cryptic post dated November 25. Instead of waiting another 18 months for his predictions to be validated, as happened with the mortgage crisis, Burry apparently prefers to stay out of the public eye when the market corrects. He’s not playing; he has executed his bet and withdrawn from the table.

The Significance of Michael Burry’s Warning

When the CEO of Palantir publicly questioned Burry’s sanity, the analyst remained silent. No defenses, no media explanations. Only the act of building a derivatives position and then disappearing from regulatory oversight. For those who studied his behavior before 2008, this pattern speaks louder than a thousand words.

Michael Burry warned about mortgage risk while banks were collapsing unnoticed. Today, he warns about artificial intelligence while the sector undergoes its greatest speculative expansion. The difference this time is that he is not passively observing. He has positioned his capital, left instructions, and chosen to wait outside the regulatory system.