Remember that sickening feeling when the dotcom dream turned into a nightmare almost overnight? One day everything looked unstoppable, the next day your portfolio was down 80% and people were actually jumping out of windows—figuratively, mostly. Well, one of the sharpest minds in finance thinks we’re living through the exact same movie again, just with better graphics and the letters “AI” slapped on the marquee.
Michael Burry doesn’t do many interviews. When the guy who called the housing crash decides to open his mouth, though, smart people listen. And what he’s saying right now is making a lot of growth-fund managers sweat through their Patagonia vests.
The Scariest Parallel Nobody Wants to Hear
Burry’s core argument is brutally simple: stock prices always peak long before the actual capital spending does. Look back at every major technology mania—railroads, radio, cars, internet—and you’ll see the same pattern. The market gets euphoric, prices go vertical, then reality creeps in while companies are still pouring billions into infrastructure that won’t pay off for a decade.
We’re not even halfway through the AI build-out, he says, and yet valuations already look like we’re in year ten of a mature industry. Data-center spending is exploding. Chip orders are backlogged for years. Power companies can’t keep up. But the stocks? They’re priced as if every promise about autonomous agents and trillion-dollar productivity gains is already banked.
“What you see in every prior one was the relevant stock market peak was before you were even halfway done with the capital expenditure. In the majority of cases, the capital expenditure hadn’t even peaked yet.”
– Michael Burry
That quote should be taped above every trading terminal in America right now.
Why This Time Really Is Different (And Not in a Good Way)
Most people comforting themselves with “yeah but the internet actually changed the world” are missing a crucial detail. The unwind this time is going to look nothing like 2000-2002.
Back then, the average investor still picked individual stocks. When Pets.com went to zero, it hurt the people who owned it, but the broader market could start healing pretty quickly. Today? Mom and pop own the Magnificent Seven through index funds and target-date retirement plans. When those leaders roll over, there’s no “rotating into value” escape hatch for most people.
Burry’s exact words: “It will be very hard to be long stocks in the United States and protect yourself.” Translation—when the passive crowd finally panics, the exits are tiny.
- More money in passive vehicles than ever before
- Heavy concentration in a handful of AI-related names
- Forced buying from 401(k) contributions every single paycheck
- Zero fundamental anchor when sentiment flips
That combination is financial nitroglycerin.
Palantir as the Poster Child
Burry didn’t mince words on certain names. One company in particular—he called it out directly—has become the perfect symbol of everything frothy in this market.
Up over 2,100% in three years. Trading at price-to-sales ratios that would make 1999 blush. And what does it actually do? A ton of consulting, integration work, and government contracts wrapped in an AI bow. The core technology isn’t uniquely theirs, Burry argues; they’re basically high-end system integrators charging nosebleed multiples.
In my view, the scariest part isn’t even the valuation today. It’s that the story has become self-reinforcing. Every earnings call mentions “AI commercial bookings” and the stock gaps 15%. But strip away the buzzwords and you’re left asking: where exactly is the durable moat?
Where Burry Is Putting New Money Instead
While everyone else is chasing the next 10x AI name, Burry is quietly rotating into the most hated sector on the board: healthcare.
Think about that for a second. Over the last three years the S&P 500 is up roughly 68%. Healthcare? Barely 11%. Sentiment is abysmal. Valuation multiples are compressed. And yet the demographic trends—aging boomers, chronic disease explosion, biotech innovation—haven’t gone anywhere.
In other words, everything that made growth stocks expensive has made defensive sectors ridiculously cheap. When the music stops, having cash flow that doesn’t depend on hype can feel like oxygen.
| Sector | 3-Year Return | Forward P/E Today |
| Information Technology | ~120% | ~32x |
| Healthcare | ~11% | ~17x |
| Difference | 109 percentage points | Nearly 2x cheaper |
Those gaps don’t close politely. They snap shut violently when growth expectations get repriced.
Even Bitcoin Gets the Axe
Burry didn’t limit his skepticism to stocks. He went after the other darling of the speculation crowd—Bitcoin—with both barrels.
“It’s a tulip bulb of our time… but it’s worse than a tulip bulb because this has enabled so much criminal activity.”
Ouch. Coming from someone who’s made a career being early and unpopular, that’s the kind of statement that tends to age either very well or very poorly. Given his track record, I know which way I’d bet.
So What Should You Actually Do?
Look, nobody has a crystal ball—not even Burry. But when someone who’s been spectacularly right about bubbles before starts ringing the alarm, the prudent move is to at least stress-test your portfolio.
- How concentrated are you in the handful of names driving the indices?
- Do you own anything for its cash flow rather than its story?
- If growth estimates get cut in half, how ugly does your drawdown scenario look?
- Are you mentally prepared for a correction that drags on for years instead of months?
I’m not saying sell everything and hide in a bunker. But raising cash levels, trimming the most egregious winners, and rotating toward sectors with actual earnings today instead of promised earnings tomorrow suddenly feels a lot less crazy than it did six months ago.
History doesn’t repeat, but it sure rhymes. And right now the rhyme scheme between 1999 and 2025 is getting harder and harder to ignore.
The AI revolution is real. The productivity gains will eventually show up. But markets have never been good at patiently waiting for “eventually.” They discount the future aggressively—until one day they decide the future is a lot further away than everyone thought.
When that day comes, having listened to the few voices willing to challenge the consensus might be the difference between preserving capital and becoming another cautionary tale.
Burry has been here before. Most of us haven’t. Maybe—just maybe—it’s worth paying attention.
