The AI Trade Is Starting To Sound Like The Dot Com Era Again

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Michael Burry is warning that the Nvidia and xAI partnership has bubble characteristics

The Big Short‘s Michael Burry is known for winning big from betting against the US real estate market during the 2008 global financial crisis. He recently shuttered his hedge fund on AI bubble fears, disclosing massive bets against AI leaders like Nvidia and Palantir Technologies.

While he has been ramping up stake in beaten-down stocks recently like Mercado Libre and Adobe, Burry continues to criticise companies like Nvidia as well as Elon Musk’s ventures for using accounting tricks to bolster their balance sheets.

Burry warned in a recent post on Substack that leading companies like Nvidia and Elon Musk’s xAI are leveraging GPU-backed securities deal structures to secure funding to power their growing AI data centres while putting the retirement funds of Americans at risk.

Burry detailed in his post the exact pipeline that moves retiree savings into the running Musk’s AI data centres without them knowing about it, describing such deals as ‘fugazi’, his word for fake.

At the same time, retail investors are openly discussing whether Tesla and SpaceX should be merged into a single company

The conversation has moved well beyond earnings, margins and cash flow

Now it’s about stacking the biggest AI story on top of the biggest space story

SpaceX

Tesla

xAI

Nvidia