Michael Burry Warns AI Frenzy Mirrors Late Stages of Dot-Com Bubble Amid NVIDIA Bets

‘Big Short’ Michael Burry, who rightly predicted the housing market crash, has issued another warning about the AI market, noting that the current excitement around AI stocks resembles the late stages of the dot-com bubble. This follows his recent short bets against the Philadelphia Semiconductor Index (SOX), which includes NVIDIA, the world’s most valuable company.

Michael Burry Hints At Imminent Market Collapse

In a Substack post, the market expert warned that the stock market’s AI frenzy is beginning to mirror the final stages of the dot-com bubble in 2000. Notably, this market excitement has been renewed amid QI earnings from top companies, including Microsoft, Meta, and Google, all of which highlighted their AI-driven growth.

“Absolutely non-stop AI. Nobody is talking about anything else all day,” Michael Burry said as he highlighted the market’s fixation on AI. He also indicated that market participants have become irrational as stocks no longer react significantly to economic data such as the jobs report.

The expert remarked that stocks are not up or down because of jobs or consumer sentiment. “They are going straight up because they have been going straight up. On a two letter thesis that everyone thinks they understand. Feeling like the last months of the 1999-2000 bubble,” he added.

Interestingly, the S&P 500 rose to a new all-time high above $7,400 yesterday as market participants continue to shrug off U.S.-Iran war-related pressures and focus on the AI boom, with bets on further upside for AI stocks. The stock market index is now on course for another 20% gain this year, which would mark the fourth consecutive year of double-digit gains.

The only other time that the S&P 500 has recorded such performance was during the dot-com bubble, when it enjoyed 20% or more gains for five consecutive years between 1995 and 1999. As such, this may explain why Michael Burry sees similarities between current market conditions and the final stages of the dot-com bubble.

On The SOX Index

Michael Burry also alluded to the recent performance of the Philadelphia Semiconductor Index (SOX), comparing it to the run-up that preceded the collapse of tech stocks in 2000. The index is currently trading at around $11,775, up over 13% in the last five days and up almost 62% year-to-date (YTD).

SOX has received a major boost from the top three companies in the index, NVIDIA, Broadcom, and TSMC, which are up 13%, 21%, and 31%, respectively, YTD. Michael Burry is short on NVIDIA and these other AI stocks.

Most recently, the expert revealed that he had bought puts on the iShares Semiconductor ETF (SOXX) with a strike price of $330 for January 2027. This came as he called the current surge largely “technical,” as he doesn’t believe that fundamentals are driving this price action.