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Why Burry's Dot Com 2.0 Thesis Doesn't Hold Water in 2026
Key Takeaways
Critics like Michael Burry believe that AI is in a 2000-like bubble.
However, the secondary market for AI compute shows no signs of slowing.
Additionally, cash flows are rising for AI-related companies.
How did Michael Burry Gain Prominence?
Michael Burry is best-known for being the inspiration behind the famous actor Christian Bale’s character in the Hollywood smash hit movie “The Big Short.” Burry’s claim to fame is that he made roughly $100 million in personal profit and $700 million for his investors in his Scion Capital hedge fund by correctly predicting the 2008 Subprime Mortgage Crisis and stock market crash.
Michael Burry’s Recent Performance is Inconsistent
To Burry’s credit, most investors will never make $100 million, let alone $10 million. Nevertheless, Burry’s performance since his 2008 windfall bet on credit default swaps has been lackluster. As U.S. equity markets have surged over the past several years, the hedge fund legend has repeatedly made premature, incorrect, doom-and-gloom bearish predictions. In fact, late last year, Burry closed his hedge fund, citing the fact that he was misaligned with markets.
Burry Believes AI is Dot Com Bust 2.0
Michael Burry’s latest bold prediction forecasts that artificial intelligence stocks are in the middle of a 1999-like mania, and the end result of the AI boom will mirror the dot-com bust. Below are three important points from Burry’s bear thesis:
1. Depreciation & Fraud Claim: One of Burry’s core arguments is that big tech firms like Meta Platforms ((META - Free Report) ) and Microsoft ((MSFT - Free Report) ) are manipulating their accounting practices and using overly long depreciation schedules to artificially inflate earnings. For instance, Alphabet ((GOOGL - Free Report) ) depreciates its servers over a period of “four years to six years.”
Why Burry’s Wrong: While GPUs have a shorter life span than traditional servers, most AI infrastructure has a useful life of 15-20 years, offsetting accelerated hardware depreciation. Meanwhile, dated GPUs do not lose all of their value once newer chips are unveiled. Older model GPUs can be used for inference (running models for users rather than training them).
2. Lack of ROI & Cash Flow Strain from Overinvestment: Burry warns investors that the unprecedented CAPEX spending will strain cash flow.
Why Burry’s Wrong: The hyperscalers are not only not seeing a slowdown in cash flow, but are seeing increased cash flow from operations, thanks to AI. For example, Alphabet’s ((GOOGL - Free Report) ) cash from operations (TTM) has soared from under $100 billion to $164 billion in 2026.
Image Source: Zacks Investment Research
Additionally, margins are expanding dramatically for tech companies. In fact, AI companies scaling AI report returns of more than $3 for every $1 invested. Furthermore, agentic AI (AI that performs humanlike tasks autonomously), the latest and hottest wave of the AI boom, is reportedly helping companies save 25% or more on costs.
3. AI Stocks like NVIDIA are Overvalued: Burry has compared NVIDIA ((NVDA - Free Report) ), the current AI darling, to Cisco (CSCO), the internet darling that topped in 2000 and would not recover for more than two decades, citing valuation.
Why Burry’s Wrong: Comparing CSCO’s 2000 valuation to NVDA’s current valuation is preposterous. When CSCO topped in March 2000, its price-to-earnings multiple exceeded 200. Conversely, NVDA’s current P/E stands at a reasonable 47.
Image Source: Zacks Investment Research
H100 Rental Prices Soar
The NVIDIA H100 GPU is NVIDIA’s powerful data center processor that is used to accelerate AI and train large language models (LLMs). Since mid-December, H100 rental prices have ballooned by ~17%, signaling continued GPU scarcity and robust demand.
Image Source: ZeroHedge
The spike in rental prices is likely due to soaring agentic AI usage and is bullish for AI infrastructure stocks like Nebius Group ((NBIS - Free Report) ),CoreWeave ((CRWV - Free Report) ), and IREN ((IREN - Free Report) ). Meanwhile, the soaring GPU demand will also trickle down to companies like Bloom Energy ((BE - Free Report) ), whose technology is used to mitigate the biggest hurdle for hyperscalers – the energy bottleneck.
NVIDIA & Bloom See Flurry of Call Buying
Ahead of NVDIA earnings (which I previewed here), deep-pocketed options traders made bold bets on Bloom Energy and NVIDIA. Monday, a call buyer bought 400 max call strike contracts in Bloom, making a million-dollar bet (this was one of many big bullish options bets in the stock today. Additionally, late Monday, an option mega “whale” bet a mind-bending ~$9 million on March $205 calls.
Monday, BE shares bucked the Nasdaq weakness and jumped 8%. Shares are attempting to breakout of a picture-perfect weekly bull flag.
Image Source: TradingView
Bottom Line
While Michael Burry’s legacy as a contrarian genius is cemented in history, his current bearish AI narrative faces a mountain of data-driven opposition. From soaring H100 rental prices to the massive efficiency gains from agentic AI, the AI landscape remains bullish.
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Why Burry's Dot Com 2.0 Thesis Doesn't Hold Water in 2026
Key Takeaways
How did Michael Burry Gain Prominence?
Michael Burry is best-known for being the inspiration behind the famous actor Christian Bale’s character in the Hollywood smash hit movie “The Big Short.” Burry’s claim to fame is that he made roughly $100 million in personal profit and $700 million for his investors in his Scion Capital hedge fund by correctly predicting the 2008 Subprime Mortgage Crisis and stock market crash.
Michael Burry’s Recent Performance is Inconsistent
To Burry’s credit, most investors will never make $100 million, let alone $10 million. Nevertheless, Burry’s performance since his 2008 windfall bet on credit default swaps has been lackluster. As U.S. equity markets have surged over the past several years, the hedge fund legend has repeatedly made premature, incorrect, doom-and-gloom bearish predictions. In fact, late last year, Burry closed his hedge fund, citing the fact that he was misaligned with markets.
Burry Believes AI is Dot Com Bust 2.0
Michael Burry’s latest bold prediction forecasts that artificial intelligence stocks are in the middle of a 1999-like mania, and the end result of the AI boom will mirror the dot-com bust. Below are three important points from Burry’s bear thesis:
1. Depreciation & Fraud Claim: One of Burry’s core arguments is that big tech firms like Meta Platforms ((META - Free Report) ) and Microsoft ((MSFT - Free Report) ) are manipulating their accounting practices and using overly long depreciation schedules to artificially inflate earnings. For instance, Alphabet ((GOOGL - Free Report) ) depreciates its servers over a period of “four years to six years.”
Why Burry’s Wrong: While GPUs have a shorter life span than traditional servers, most AI infrastructure has a useful life of 15-20 years, offsetting accelerated hardware depreciation. Meanwhile, dated GPUs do not lose all of their value once newer chips are unveiled. Older model GPUs can be used for inference (running models for users rather than training them).
2. Lack of ROI & Cash Flow Strain from Overinvestment: Burry warns investors that the unprecedented CAPEX spending will strain cash flow.
Why Burry’s Wrong: The hyperscalers are not only not seeing a slowdown in cash flow, but are seeing increased cash flow from operations, thanks to AI. For example, Alphabet’s ((GOOGL - Free Report) ) cash from operations (TTM) has soared from under $100 billion to $164 billion in 2026.
Image Source: Zacks Investment Research
Additionally, margins are expanding dramatically for tech companies. In fact, AI companies scaling AI report returns of more than $3 for every $1 invested. Furthermore, agentic AI (AI that performs humanlike tasks autonomously), the latest and hottest wave of the AI boom, is reportedly helping companies save 25% or more on costs.
3. AI Stocks like NVIDIA are Overvalued: Burry has compared NVIDIA ((NVDA - Free Report) ), the current AI darling, to Cisco (CSCO), the internet darling that topped in 2000 and would not recover for more than two decades, citing valuation.
Why Burry’s Wrong: Comparing CSCO’s 2000 valuation to NVDA’s current valuation is preposterous. When CSCO topped in March 2000, its price-to-earnings multiple exceeded 200. Conversely, NVDA’s current P/E stands at a reasonable 47.
Image Source: Zacks Investment Research
H100 Rental Prices Soar
The NVIDIA H100 GPU is NVIDIA’s powerful data center processor that is used to accelerate AI and train large language models (LLMs). Since mid-December, H100 rental prices have ballooned by ~17%, signaling continued GPU scarcity and robust demand.
Image Source: ZeroHedge
The spike in rental prices is likely due to soaring agentic AI usage and is bullish for AI infrastructure stocks like Nebius Group ((NBIS - Free Report) ), CoreWeave ((CRWV - Free Report) ), and IREN ((IREN - Free Report) ). Meanwhile, the soaring GPU demand will also trickle down to companies like Bloom Energy ((BE - Free Report) ), whose technology is used to mitigate the biggest hurdle for hyperscalers – the energy bottleneck.
NVIDIA & Bloom See Flurry of Call Buying
Ahead of NVDIA earnings (which I previewed here), deep-pocketed options traders made bold bets on Bloom Energy and NVIDIA. Monday, a call buyer bought 400 max call strike contracts in Bloom, making a million-dollar bet (this was one of many big bullish options bets in the stock today. Additionally, late Monday, an option mega “whale” bet a mind-bending ~$9 million on March $205 calls.
Monday, BE shares bucked the Nasdaq weakness and jumped 8%. Shares are attempting to breakout of a picture-perfect weekly bull flag.
Image Source: TradingView
Bottom Line
While Michael Burry’s legacy as a contrarian genius is cemented in history, his current bearish AI narrative faces a mountain of data-driven opposition. From soaring H100 rental prices to the massive efficiency gains from agentic AI, the AI landscape remains bullish.