- The stock market doesn't operate on long-term principles anymore. So, in some sense, it is immaterial that the rosy scenarios where AI is responsible for >$30 trillion in the next decade are unlikely. If you bet against the hype and it goes on for a few more months/years you lose as much or more than if you went along for the ride.
Burry is well aware of this, he has written about how passive investing is contributing to this problem.
- This is a very interesting comment. Companies like OpenAI or ChatGPT sell hardware hidden in tokens, and the token is different for each company depending on the tokenizer. The concern is this: when you have an Opus 4.7, Sonnet, or GPT 5X with an Nvidia H100 or H200 GPU, what will happen to this cost when, if not Nvidia, another Chinese company enters the market and starts running these models? The point here is that as long as Nvidia is the provider, and limits access to the machines and the number of data centers is also limited, these companies can be worth whatever they want. But the moment this starts to expand, the value will surely decline, because what you're selling isn't the model itself, which is ultimately just a 1 TB file that you have replicated across machines. What you're selling is access to a software program on a specialized machine. As long as you control the resource, which in this case is that machine, you'll have value. The moment other machine manufacturers enter the market, your value will decrease.
by martinclayton
5 subcomments
- What's the rationale offered by NASDAQ for their new "15-days and you're in the index" rule for these massive IPOs?
Seems equivalent to removing road safety rules for the least-tested, most-powerful new vehicles only.
by helsinkiandrew
2 subcomments
- Matt Levine made an interesting point that the SpaceX IPO looks like a short squeeze/pump and dump [1]:
1. Do an IPO.
2. Sell a small amount (5%) to price insensitive Elon Musk-fans at a $2 trillion valuation
3. Get in all the indexes, because you are huge.
4. Unlock more stock, which the index funds have to purchase
[1] https://www.bloomberg.com/opinion/newsletters/2026-06-01/the...
- Of course not, this is pure speculation just like in past cycles, until it goes bum.
- And TSLA isn't worth it's current market cap of 1.47 trillion dollars either. Hasn't been of any consequence for years.
- Coinbase IPOed 5 years ago and is (and has mostly been) trading below its IPO price.
Perhaps private equity has become so skilled that when they finally sell to the public they leave nothing on table.
- It’s very risky to make these kind of claims. If the denominator (USD) gets obliterated they might very well be worth $1T. It’s all about liquidity and central banks have a whole bag of tricks at their disposal. They never want to see deflation shocks again and they prefer asset inflation.
- I think you could argue Anthropic could be worth $1T. With AI becoming an essential work utility, every global knowledge worker would want a claude subscription. There are 650M to 1B of such office workers. 300M workers × $50/month × 12 = $180B/year. The genie is not going back into the bottle, I have seen what claude code can do when properly connected to tools.
But Micheals arguments are valid. There could be competition, or even local models, thus indeed becoming 'commoditized'.
- This is what they're actually talking about:
https://michaeljburry.substack.com/
And the counterpoint is that META, GOOG, AMZN, MSFT are all betting their companies that AI is the next move. Just yesterday, GOOG lent another $80 billion to be invested in their AI hardware, and they're also investing their own stock in AI hardware, for a cumulative investment of already over $1 trillion. Clearly the tech sector thinks this is worth it.
And of course the people deciding in FANG companies actually have numbers, Michael Burry has the same numbers you have. So these investments are "worth it" according to people with inside information. What Burry is doing, in one perspective, is calling out the leadership of FANG companies. Now that's the job of a short-seller of course. But that's the bet being made.
- The real question is how we are defining "worth." Much of the market has decoupled from traditional fundamental data, with Tesla's P/E of 380 illustrating this perfectly, but the Tesla stock price refuses to collapse.
We all know the market can stay irrational much longer than you can stay solvent if you bet against it. If you watched "The Long Short" (excellent movie btw.) you know how close Michael Burry came to capitulation before his subprime bet paid off. He seems to have a tendency to be too early with his predictions, even with his genius GameStop investment. So while he may be right again fundamentally, his timing may be completely off and those companies could be "worth" significantly more than a trillion dollars, at least temporarily, in stock valuations.
My personal prediction is this: The hype will go on longer than people think, just like with the New Economy. There is this quote from market analyst Larry Wachtel in 1999 who said: "Everybody's happy, everybody's making money - something's wrong here"[1]. Ironically, even Wachtel eventually succumbed to FOMO, capitulated, went in late, and lost a lot of money[2]. I am trying to not make his mistake, but it will be tempting to do so, I am sure about that.
[1] https://youtu.be/uaK5tsH59UM?t=1188
[2] https://youtu.be/DSVPsP0Bfx0?t=456
by josefritzishere
0 subcomment
- What's going on with SpaceX and the S&P seems pretty crimey.
- Doesn't matter, it will go into the nasdaq/s&p at $1t, passive funds will have to buy it at that price, meaning a wealth transfer from 401ks to people with pre-ipo stock
The only reason AI is worth $1T is if you believe it will continue to get better and displace all those jobs, not just in claude replacing knowlege workers, but in the outcome of that work being so transformational that physical work is also replaced.
If it does, then the entire economy is completely turned over and it doesn't really matter as nobody will have a job, and thus the entire concept of the S&P and the western economy as a whole falls to bits.
by LightBug1
1 subcomments
- Literally adjusting my pension funds and ETA's away from this ... I don't even care if I lose out. I want stable growth. Not a nation obsessed with memestocks.
by uriahlight
0 subcomment
- It'll be a wonderful crow feast to anyone who agrees with Michael Burry on this.
by simianwords
0 subcomment
- I'm noticing a sort of mass hysteria and performative concern over AI's fundamental economics coming from grief/cope.
I believe that Anthropic is worth $1T. I believe it won't go below it (inflation adjusted) for the next 2+ years. How do I make money with this?
- [dead]
by dansmith1919
4 subcomments
- bro was right ONCE and now every tweet is a headline
- AI doomers really are punching the air these days.
They will be right eventually and inevitably. Until then, it's funny watching them build a personal "brand" just to say "I told you so" when the market drops in X years.
by wewewedxfgdf
5 subcomments
- So the company that actually makes computers programming computers work, ain't worth $1T.
Whoever you are Michael Burry, you don't know shit about the implications, and where this is headed, and that the party only just got started.
I sure do wish I had a big chunk of that overpriced Google IPO stock, and Amazon, and MS, and Apple, etc etc etc
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