Michael Burry warns AI hype could trigger a bubble bigger than Enron

Michael Burry compared today’s AI optimism to the speculative fervor that preceded the dot-com and housing crises, suggesting the current mania could have even more damaging effects than Enron’s failure. In a Substack exchange, he recalled how Federal Reserve officials dismissed bubble warnings in 2005 and 2007, drawing a parallel to today’s narrative. Burry highlighted that major technology companies are pouring trillions into AI hardware and data centers, creating risks that dwarf the underlying economic value.

He noted that private AI startups are valued hundreds of times higher than during the original internet boom, with debt financing accelerating the bubble’s clock. The investor warned that the massive capital inflow, much of it off-balance-sheet, could lead to a sharp drop in returns and broader market distress. He expects the turning point to arrive around 2028, when compute costs become unsustainable. Burry declined further comment.