One of the most-popular investor in America Michael Burry ’warns' Google and Microsoft: You are wasting trillions of dollars on ...

Michael Burry, one of America’s biggest investor, who is popular for predicting the 2008 housing market crash has now raised an alarm over what he calls an AI bubble. Burry has cautioned that tech giants like Google and Microsoft are pouring trillions into infrastructure that may never deliver lasting returns.

As reported by Business Insider, in a recent Substack debate with Anthropic cofounder Jack Clark and podcaster Dwarkesh Patel, Burry compared the present AI spending to a 1960s anecdote involving Warren Buffet’s Baltimore department store, Hochschild-Kohn.“When the department store across the street put an escalator in, he had to, too. In the end, neither benefited… That is how most AI implementation will play out,” Burry wrote.

He believes that hyperscalers are wasting huge sums on microchips and data centers which will quickly become obsolete and powering chatbots and AI tools that will soon be commoditised.

Trillions of dollars at risk

Burry further warned that trillions of dollars being spent have “no clear path to utilization by the real economy.” He feels that the competitors will benefit equally, leaving no durable advantage. “We’re past the point where stocks will reward investors for further buildout, and entering the period where the true costs and lack of revenue will start to show themselves,” he cautioned.

Burry also predicted that the employment in the tech industry will stagnate or decline, signalling a long downturn.

Poster children of the AI bubble

Burry also singled out that Nvidia and Palantir as ‘poster children’ of the AI hype. He said that Nvidia is a ‘power hungry, dirty solution’ holding ground until more efficient chips arrive, while criticising Palantir CEO Alex Karp for aggressively marketing despite weak fundamentals. Along with this, Burry has also highlighted three unexpected developments:- Google’s missteps: “Google playing catch-up to a startup in AI is mind-blowing,” he said.- ChatGPT’s ripple effect: He likened OpenAI’s chatbot launch to “someone building a prototype robot and every business investing for a robot future.”- Nvidia’s dominance: He expressed surprise that more power-efficient chips haven’t displaced Nvidia yet.Burry also questioned assumptions about “AI-proof” careers, noting that tools like Anthropic’s Claude could replace costly trades. “If I’m middle class and facing an $800 plumber call, I might just use Claude,” he said, adding that AI chatbots could even “make people dumber” if professionals like doctors over-rely on them.