The "Big Short" Michael Burry, famous for his successful prediction of the U.S. housing crisis, warned that the current craze for artificial intelligence (AI) in the U.S. stock market is increasingly like the final stage before the Internet bubble bursts. Burry wrote on Friday that during the long drive, he could hardly hear any topic other than AI being discussed on financial television and radio. He said: "It is completely non-stop talking about AI, and no one discusses anything else all day long."
Bury believes that the current market response to economic data has gradually lost its logic. Although the U.S. consumer confidence index recently fell to a record low, the market chose to ignore this risk and paid more attention to April employment data that was slightly better than expected. That day, the S&P 500 index hit another record high.
Burry wrote: “Stocks no longer rise or fall really because of the jobs data or consumer confidence, but because they keep rising.”
TAGPH 12 He further said that the market is currently chasing a crazy rise around a "two-letter theme" that "everyone thinks they understand", and this atmosphere reminds him of the market state in the last few months of the Internet bubble from 1999 to 2000.Burry also compared the recent trend of the Philadelphia Semiconductor Index to the upward trajectory before the technology stock crash in 2000. Data shows that the Philadelphia Semiconductor Index rose by more than 10% this week, and the cumulative increase since 2026 has reached 65%.
In the past two years, a large amount of money has continued to pour into AI-related stocks, pushing the major U.S. stock indexes to continuously reach new historical highs. Semiconductor companies and large technology stocks related to AI infrastructure and software have become the core driving force of this market, and the generative AI boom has further pushed up market valuations.
At the same time, well-known hedge fund manager Paul Tudor Jones also recently compared the current AI market with the Internet bubble period, but he believes that the bull market may still have room for further growth.
Jones said in an interview with the media this week that the current market environment is "very much like 1999," which is about a year before technology stocks peaked in early 2000. He predicts that the current AI market may continue for one to two years.
However, Jones also warned that if valuations continue to inflate rapidly, the magnitude of future market adjustments may also be quite alarming. He said: "Just imagine, if the stock market rises another 40%, the total market value of U.S. stocks as a percentage of GDP may reach 300% or even 350%. By then, the final correction in the market may be suffocating."