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Michael Burry attends the premiere of "The Big Short" at Ziegfeld Theatre. Jamie McCarthy/Getty Images

Michael Burry warns the stock market is 'obviously' in the first stage of a 2008-style crash — with just 6 to 9 months to go until Stage 2

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Burry’s comments emphasize his pessimistic views on the stock market, even as major financial indexes keep ascending to new heights on the back of eye-popping AI-related spending from the tech sector. Such a prediction coming true would mean financial market turmoil setting in during the first or second quarter of 2027.

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On Oct. 6, the S&P 500 reached 7,830 points, a record high on the heels of a 0.7% increase from the prior day. It previously set the record for the 28th time this year alone on Aug. 13.

The 2008 financial crisis was triggered by the collapse of the housing market once defaults had spread on risky subprime mortgages. In 2001, there was a brief recession brought on by a wave of speculative investing going bust in the dot-com boom. There was a stretch of remarkable financial and economic growth leading up to both of these recessions.

Burry’s contrarianism

Burry is most famous for betting against the American housing market in the run-up to the 2008 financial crisis. Since then, he’s taken positions against chipmakers Micron and iShares Semiconductor ETF, among other companies involved in the AI buildout.

“Fundamentally, I am moving timelines up,” Burry said in a recent investment newsletter. “As such, I want more leverage in my short positions. Better timelines make leverage more palatable.”

He said he replaced stock shorts with puts on his Nvidia, Palantir, and Micron positions that expire at fluctuating points next year. These three companies are key players in the AI boom.

For now, Wall Street has managed to shrug off inflation and bond market turmoil even as policymakers grow concerned about price hikes erasing Americans’ wage growth for much of this year.

Investors are also tracking whether the Federal Reserve will raise interest rates later this month for the second time this year, a step that would increase corporate and individual borrowing costs across the economy.

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A challenge to Burry

Burry has also said he believes the AI boom will sputter, arguing there’s a mismatch between rapid chip development and the long lifespan of a data center.

If the chip hardware is upgraded faster than a data center’s vast and costly infrastructure, it could leave hyperscalers on the hook for expensive overhauls that weren’t originally anticipated. Burry’s argument, though, has been challenged by Steve Eisman, another prominent “Big Short” investor.

“If AI succeeds because Anthropic and OpenAI grow like crazy, and the hyperscalers do well, it’s not going to matter if the depreciation schedule changed from three to four years to five to six years,” Eisman said in a recent episode of the New Money podcast, citing huge demand among hyperscalers even for the older chips.

Burry has also pointed out that hyperscalers leading the charge in the AI buildout have $3 trillion in financial commitments that aren’t reflected on their balance sheets. At least not yet, since accounting rules allow for corporate commitments on purchasing AI hardware to be kept off the books until the products are delivered.

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Joseph Zeballos-Roig Contributor

Joseph Zeballos-Roig is a policy and politics journalist based in Washington D.C with a focus on economics. He is experienced in connecting the significance of events in the capital to the lives of everyday Americans whether its taxes, tariffs, interest rates or federal programs.

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