Michael Burry, the famed investor known for predicting the 2008 housing market collapse, has found his next big target: artificial intelligence.
Through a new newsletter and public campaign, Burry is arguing that the AI sector is in a bubble comparable to the dot-com era. His central thesis is that the massive capital expenditure on AI infrastructure, which is projected to reach trillions over the next few years, far outpaces actual end-user demand.
Essentially, he believes the industry is building a massive highway that no one is going to drive on.
Is he right? Or is he missing the forest for the trees?
To unpack the reality behind the "AI bubble" headlines, I talked it through with SmarterX and Marketing AI Institute founder and CEO Paul Roetzer on Episode 183 of The Artificial Intelligence Show.
The Case Against (and For) the Boom
Burry’s argument, developed with researcher Phil Clifton, posits that tech giants and chipmakers like Nvidia are overestimating the longevity and utility of their infrastructure.
He compares the current frenzy to the telecom crash of the late 1990s, specifically citing Cisco’s rise and fall. The core belief here is that investors are expecting far more economic importance from AI technology than it can actually deliver in the near term.
But while Burry is betting against the industry, Roetzer sees a very different picture.
While acknowledging that market fluctuations are inevitable, Roetzer believes the fundamental premise of the AI revolution remains sound.
“We're on the leading edge of an intelligence explosion,” says Roetzer. “AI is going to be everywhere and in everything.”
The disconnect, according to Roetzer, lies in how critics define "demand." Skeptics like Burry are looking at current models and assuming the demand curve flattens. But the technology isn't static.
“The Nvidia chips are used to do all these things and the build out of data centers, all of it has largely been about building the models,” Roetzer explains. “Moving forward, it's all about delivering those models to all of us.”
And those models are evolving rapidly. We aren't just talking about text chatbots anymore.
“They're doing reasoning. They're doing image generation, video generation, audio, 3D worlds, AI agents, robotics,” says Roetzer. “All of these things are going to require dramatically more computing power, dramatically more energy than what is currently available in the world.”
Winners, Losers, and the Long Game
Does this mean every AI company is safe? Absolutely not.
Roetzer is quick to point out that a general upward trend doesn't protect individual companies from failure.
“There will be losers in this. There will be multi-billion dollar companies that just go away,” he says. “There will be dramatic drops in stock prices.”
He compares the current skepticism to the doubt that surrounded Google immediately after ChatGPT was released. At the time, many believed Google’s dominance was over. But those who understood the company's deep infrastructure and talent pool knew better.
The market is volatile, and short-term earnings calls often distract from the long-term reality.
“People, even very savvy investors, have no concept of where this all goes, how these models advance, what the demand is gonna be for this sort of stuff,” says Roetzer.
The Risk of Sitting on the Sidelines
Burry might be right about specific accounting practices or short-term valuations. He famously bet right in 2008. But he has also bet wrong numerous times since then.
For business leaders and professionals, the danger lies in letting fear of a financial bubble paralyze your strategic adoption of the technology.
“There's a far greater risk in sitting back and assuming this is all a bubble than positioning yourself and your company to thrive in the age of AI,” says Roetzer.
He emphasizes that you need to develop a personal and professional thesis on where this technology is going.
“I believe we are on the leading edge of an intelligence explosion. I think it's just starting,” says Roetzer.
The Bottom Line
There are legitimate risks to the AI rollout, from supply chain breakdowns to regulatory hurdles. And yes, the stock market will have its ups and downs.
But looking at the trajectory of reasoning models, agents, and robotics, the demand for intelligence shows no signs of stopping.
The question isn't whether Nvidia's stock will dip next quarter. The question is whether you believe AI is a passing fad or a fundamental shift in how the world works.
“Have a hypothesis about where the future goes,” says Roetzer. “And then decide what your level of conviction is in that hypothesis, and let that then guide your decisions.”
If you wait for the bubble to burst, you might just miss the revolution.
Mike Kaput
As Chief Content Officer, Mike Kaput uses content marketing, marketing strategy, and marketing technology to grow and scale traffic, leads, and revenue for Marketing AI Institute. Mike is the co-author of Marketing Artificial Intelligence: AI, Marketing and the Future of Business (Matt Holt Books, 2022). See Mike's full bio.