Source: Jin10 Data
Michael Burry, the real-life inspiration behind "The Big Short" for predicting the U.S. housing market crash, has warned that the current market's obsession with artificial intelligence is beginning to resemble the final stages before the dot-com bubble burst.
Burry wrote in an article posted on Substack last Friday that during long drives, he had been listening to financial TV and radio programs, feeling that “everyone talked about AI nonstop, and not a single person discussed anything else all day.”
The investor, best known for successfully predicting the U.S. housing market crash, said that the stock market no longer responds in a logical, meaningful way to economic data such as employment reports or consumer confidence.
Last Friday, the S&P 500 reached a new all-time high as traders focused more on the slightly better-than-expected April nonfarm payrolls report than on the record-low consumer confidence index.
But Bury wrote that stock prices rose and fell not because of employment or consumer confidence; they surged upward simply because they had been rising upward, driven by nothing more than a two-letter argument that everyone thought they understood... it felt like the final months of the 1999–2000 bubble.
Burry compared the recent performance of the Philadelphia Semiconductor Index (SOX) to the rally preceding the tech stock crash in March 2000. The index rose more than 10% last week, bringing its cumulative gain for 2026 to 65%.
Burry made these remarks as investors have poured massive amounts of capital into AI-related stocks over the past two years, pushing major U.S. stock indices to record highs. Semiconductor companies and mega-cap tech stocks tied to AI infrastructure and software have led this rally, with soaring enthusiasm for generative AI driving valuations sharply higher.
Legendary macro trader and founder and chief investment officer of Tudor Investment Corporation, Paul Tudor Jones, has also drawn parallels between the current AI-driven rally and the period before the dot-com bubble burst, though he believes this bull market may still have room to rise further.
Jones told CNBC’s “Squawk Box” that the current environment feels like 1999—about a year before tech stocks peaked in early 2000—and he estimates this rally could last another one to two years.
At the same time, Jones also warned that if valuations continue to inflate, the eventual correction could be very severe.
Jones said, imagine if the stock market rises another 40%, the ratio of market capitalization to economic output (GDP) could reach an astonishing 300% or even 350%. “Everyone understands that some jaw-dropping correction will inevitably occur by then.”