Michael Burry, the investor who gained international fame for predicting the 2008 housing market collapse, has launched a new subscription newsletter to issue a stark warning about the artificial intelligence sector. Burry contends that the current excitement surrounding AI mirrors previous speculative manias, specifically the dot-com boom and the housing bubble, and that policymakers are once again ignoring the signs of an impending bust.
After deregistering his hedge fund, Burry is using his new platform, titled "Cassandra Unchained," to communicate his detailed bearish thesis directly to the public. He aims to leverage the significant audience of 1.6 million followers he has cultivated on the social media platform X, where his often-cryptic posts are closely analyzed by investors.
Key Takeaways
- Michael Burry, known from "The Big Short," has started a Substack newsletter named "Cassandra Unchained."
- The newsletter, costing $379 annually, will detail his thesis that the AI market is a speculative bubble.
- Burry compares current optimism from Federal Reserve Chair Jerome Powell to dismissals of risk by former Chair Alan Greenspan before the 2008 crisis.
- He has previously expressed bearish views on major AI-related stocks, including Nvidia and Palantir.
A New Platform for a Familiar Warning
Michael Burry has transitioned from managing his hedge fund to a more public-facing role with the launch of his Substack newsletter. The publication, named after the mythological Greek priestess whose prophecies were ignored, signals his intent to deliver unheeded warnings about what he perceives as excessive market speculation.
The move represents a strategic shift for the investor, allowing him to bypass traditional financial media and present his analysis directly to a paying audience. With an annual subscription fee of $379, Burry is betting that his reputation and large social media following will translate into a sustainable platform for his market commentary.
For years, investors have attempted to decipher Burry's short, often deleted posts on X. This new format promises a more in-depth and structured explanation of his thinking, particularly concerning his negative outlook on the AI industry.
Drawing Parallels to Past Bubbles
The central argument of Burry's new venture is that history is repeating itself. He draws a direct line from the current enthusiasm for AI to the tech mania of the late 1990s and the housing bubble of the mid-2000s. In his view, investors are once again caught in a cycle of irrational exuberance, funding massive capital expenditures based on promises of future growth while dismissing traditional valuation metrics.
From Dot-Com to AI
Burry's skepticism is rooted in experience. During the height of the dot-com bubble, he was famously shorting overvalued technology stocks like Amazon. His current warnings about the AI sector, including bearish positions on companies like Nvidia, follow a similar pattern of identifying what he believes is unsustainable market hype.
In a post on X announcing the newsletter, Burry highlighted what he sees as a dangerous parallel between statements from current and former Federal Reserve chairs.
"Feb 21, 2000: SF Chronicle says I'm short Amazon. Greenspan 2005: 'bubble in home prices … does not appear likely.' [Fed Chair Jerome] Powell '25: 'AI companies actually… are profitable… it's a different thing.' I doubted if I ever should come back. I'm back. Please join me."
This statement juxtaposes his own past successful predictions with what he frames as dangerously dismissive comments from the heads of the U.S. central bank.
A Critique of Federal Reserve Optimism
Burry's specific target is a comment made by Federal Reserve Chair Jerome Powell, who recently sought to differentiate the AI boom from past bubbles. In an October 2023 news conference, Powell noted that the highly valued AI companies today are unlike their dot-com predecessors because many are profitable.
"This is different in the sense that these companies, the companies that are so highly valued, actually have earnings and stuff like that," Powell stated, attempting to reassure markets.
For Burry, this reassurance is an alarming echo of comments made by then-Fed Chair Alan Greenspan in 2005. Just two years before the subprime mortgage crisis began to unfold, Greenspan publicly stated that a national housing bubble did not appear likely. Burry's famous bet against the housing market was predicated on the idea that Greenspan and other officials were fundamentally misreading the systemic risk.
The Cost of Confidence
Alan Greenspan's 2005 assessment that a housing bubble was unlikely is now widely seen as a major policy failure that contributed to the severity of the 2008 financial crisis. Burry suggests Powell's confidence in the profitability of AI firms could be a similar blind spot.
By highlighting this parallel, Burry argues that Powell's focus on profitability misses the larger point about speculative valuation and market sentiment. He implies that just as the housing market's collapse was triggered by factors beyond simple home prices, the AI market's potential downturn could be driven by forces not captured in current earnings reports.
The Market's Next Big Short?
While Burry has not detailed every position in his new newsletter, his public statements have made his general stance clear. He has been openly bearish on some of the biggest names in the AI revolution, including semiconductor giant Nvidia and data analytics firm Palantir. These companies have seen their valuations soar as investors pour capital into anything related to artificial intelligence.
Burry's thesis suggests that these valuations are not supported by fundamentals, even with current profitability. He believes investors are extrapolating exponential growth far into the future, a classic sign of a speculative bubble. The massive capital investment required for AI infrastructure, he argues, is being funded on the assumption that the technology will completely reshape the economy—an assumption he is now publicly challenging.
With the launch of "Cassandra Unchained," the financial world will be watching to see if Burry's latest prediction proves as prescient as his legendary call more than 15 years ago.