The too much excitement around artificial intelligence mirror the conditions similar to the dot-com bubble of 1999-2000, investor Michael Burry, known for predicting the 2008 United States housing crash, has warned.
In a recent Substack post, Burry said financial markets are no longer reacting logically to economic data. He noted that stock prices appear to move more on AI-related enthusiasm than on key indicators such as jobs reports or consumer sentiment.
“Absolutely non-stop AI. Nobody is talking about anything else all day,” Burry wrote.
He compared the recent performance of the Philadelphia Semiconductor Index to the rapid rise in technology stocks before the market crash in March 2000. The index is up more than 10% this week, pushing its 2026 gains to 65%, according to CNBC.
“Stocks are not up or down because of jobs or consumer sentiment,” Burry wrote. “They are going straight up because they have been going straight up. On a two letter thesis that everyone thinks they understand. ... Feeling like the last months of the 1999-2000 bubble,” he added.
He suggested that the current rally in AI-linked companies could reflect excessive investor optimism. His comments came as the S&P 500, the premier stock market index tracking the top 500 listed
US companies, reached another record high after a slightly stronger-than-expected April jobs report rather than a record low reading in consumer sentiment.
His latest remarks come as investors continue pouring money into AI-related stocks. This is driving major US indexes to record highs even as broader market sentiments remain subdued.
Semiconductor makers and large technology companies linked to AI infrastructure have largely led the market rally, fueled by strong enthusiasm over the emerging capabilities of generative AI.
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Burry is not alone in his concerns for the AI-driven market rally. Hedge fund manager Paul Tudor Jones also recently told CNBC that the current AI-driven rally resembles the late stages of the dot-com boom. However, he believes that the gains could continue for another one or two years. Speaking on CNBC's “Squawk Box,” Jones warned: “Just imagine the stock market went up another 40%,” Jones said. “The stock market GDP is going to probably be good lord 300%, 350%. You just know that there'll be some ... breathtaking kind of corrections."
Many other investors have also raised similar concerns, noting that AI bubble fears could end up hurting AI and IT sectors the most.
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