My money is on the American bubble popping. China would do just fine. As to Europe’s? Probably not developed enough to seriously impact them, but probably able to fill America’s void once the bubble action has died down. America is pretty fucked in general, so it isn’t so much AI in particular, but rather a ghost economy.
Something based on imaginary stocks, grift, de-industrialization, ghost jobs and falsified labor statistics, likely mixed with a debased dollar, just doesn’t bode well.
Something based on imaginary stocks, grift, de-industrialization, ghost jobs and falsified labor statistics, likely mixed with a debased dollar, just doesn’t bode well.
This is literally describes China, what are you even talking about?
It is a matter of degree. While China has issues, America’s is much worse across the board.
It is a gamble for sure against innovation and a blind one too. I say this as it is clear right now that scaling up LLMs while very effective at substantially improving many AI metrics, it really did not have much impact on logic. I have been calling this the Cognitive Gap and it is really holding back AI.
Clearly the big LLM companies do not have a solution to this gap despite efforts like the reasoning models and that likely means we need an entirely different tech to front end LLMs or replace them.
This begs the question…who has a line of sight on how to scale up logic and the answer as near as I can tell is no one right now. Maybe there is something in a lab somewhere, or even with just a small team or individual, but it is not presently visible. It could come out any day now and make all those Data Center investments worthwhile or may take years before we see the Cognitive Gap close which will really make those same Data Centers completely out of alignment with the value they bring.
Shorting the AI industry is a roll of the dice, but less so than the blind investments still happening in Data Centres despite no clear path to improve logic and close the Cognitive Gap. In fact shorting seems like the safer bet.
Going to be interesting as if the Cognative Gap is not closed for years to come, those Data Center investments are never going to pay off as the value will just not be there. The entire USA economy is tied to AI it seems right now so the roll of the dice is perhaps the biggest risk / reward in history.
And even if they solve some problems with AI and make them smarter, they still have to solve the “actually making a profit” problem to justify these share prices. LLMs already have some use at their current level, but certainly not for the price they’d need to charge to break even, let alone actually making a profit. If they double the smarts but double the training and/or inference cost, they’ll still end up in the same place.
I read a stat that if the true costs of AI was past onto users it would 42 times more expensive or something along those lines. Who know the right number, but it is obviously out of alignment with the value AI is able to bring today. Imagine instead of $20 / month it was $840 / month to just break even.
Funny thing is even that number would be based on all the people who can pay 20 but not 800. If it all has to be balanced by the users it would probably be an order of magnitude… Or the market would play like it logically should and it would be like 3 companies paying a million a month. But what would they do with it? Sell it at a loss for like 20 per user and hope they figure out some way to make money :)
Now if it never pops at least it’s funny that he lost a bunch of money
I do think there is an AI bubble, but “guy who bets against things, bets against the latest thing”
A billion dollar bet against a trillion dollar bubble. Cute.
That really depends on how much money he has.
I could t afford to bet nearly much against it but I would if the returns wouldn’t be enough to buy a soda.
Although I do think that there’s a big AI bubble, the reality is that Pandora’s box has already been opened, and it’s not closing back up. The technology is here to stay and it will continue to be integrated into everyday life bubble or no bubble.
It was so over hyped from the beginning though. The broligarchs insisted as long as we fed it all of our data, and threw unlimited money at it, there was no way it wouldn’t be a success. That’s literally all America has been doing for nearly a year. They’ve forced it into every government department possible, even places where it clearly didn’t belong. They’ve thrown billions at it, they allowed fucking 19 year old DOGE fuckwads to access hoards of sensitive data on every U.S. citizen, and stole every cent they could get their hands on. After all of that, how much has AI in the U.S. actually improved since January 19th, 2025?
Once the bubble pops, we can go back to letting AI do what it’s actually good at—pattern recognition, summarization, translation, natural language processing—and stop trying to shoehorn it into every single thing.
I don’t follow the AI bubble trend at all. But I have been seeing alot of videos all of a sudden, popping up in my recommended talking about it. Who knows.
I just saw a TV commercial for a special series the local news is doing on traffic issues, and they used several quick background graphics, and at least one quick film clip that were obviously AI-generated.
You can argue over the appropriateness of AI, but most people would agree that it doesn’t belong anywhere near a news broadcast. If you don’t have footage, it is highly unethical to create footage to juice up your news reports.
It’s only pervasive because the AI companies are losing money on every generated token while burning investor money to keep the lights on. If people had to pay for what it really costs they’d be using it a lot less.
I think you responded to the wrong comment.
I don’t follow the AI bubble trend at all
I was responding to you finally noticing how pervasive it is getting.
I don’t follow the AI bubble trend at all. But I have been seeing alot of videos all of a sudden, popping up in my recommended talking about it. Who knows.
A few banks started issuing warnings, and some of the “biggest upcoming launches” were extremely underwhelming, like Sora 2 and GPT 5. Not only that, but the companies going all in on replacing workers with AI are still not showing a clear return on investment, so this combination is making people more aware about the bubble.
I don’t follow the AI bubble trend at all
It was relevant to your noticing how prevalent it is getting.
Burry also lost money since 2008 making shorts like Tesla. The Big Shart.
I mean, he is not wrong per se, he just had the wong timing.
With shorts timing is all that matters.
Looks like very mixed returns. Which is what you’d expect from a strategy of betting on areas that are significantly overvalued.
The market can remain irrational for longer than you can remain solvent
See Bill Ackerman and Herbalife.
Federal regulators should have shut that shit down ages ago, but the grifter party loves MLMs (look at how the DeVos family made their money…)
Can investors remain irrational long enough for OpenAI to remain solvent?
Nvidia down ~8% this week, Palantir down ~10%
Maybe the needle really is shifting.
Maybe, but he’s also been super wrong a bunch of times on his skitzo twitter account so grains of salt and all that. Not saying the guy isn’t smart, clearly called one of the biggest systemic crisis of our times, but he struck gold once and struck out a bunch more often.
Because it’s more likely that he got lucky once and his short position was strong enough that he could keep paying the premiums than it is that he is some super genius who knew something noone else knew
The fact that he was even able to make that bet is incredible. How deluded do you have to be to think the AI bubble won’t burst? Keeping it going will require in ever-increasing amounts of money to paper over the gaping chasms that keep cropping up, and eventually the amount of money necessary to keep it going will cease to be feasible. Then, after taking gullible investor for all of they’ve got, the whole thing will fall over in the world’s most well deserved and predictable market crash.
The subprime mortgage collapse was inevitable only in hindsight, you had to have a good understanding of the market to see it in advance. To see the level of corruption and false promises that have to be made in order to make the mortgage bubble possible. But everyone can see the AI BS right out in the open, I’m not talking about the “how many Rs are in strawberry” questions either, I can sort of see why that’s not really a fair question. I’m talking about the fact that every single business that has ever tried to replace its employees with AI, has always failed, and failed almost immediately. Even Amazon couldn’t make it work.
Everyone can see it coming, but they believe the AI companies’ hype that the AGI breakthrough will be here “soon”. Which if actually true, might be worth the bet.
For my money they either hit AGI and then we all die, or there is a crash before that. Yay.
inevitable only in hindsight
I’m not so sure. I’m still friends with a guy who told me emphatically “you dont understand what we did, we destroyed the global economy” and then explained the whole subprime mortgage scam to me, back in like 2007. Lots of downstream businesses, new home builders, paint and drywall companies, building materials stores, started folding several months before the official crash as well. I wasn’t nearly as aware of things then, I was a grown adult but not yet 30 and with little formal education, but there were definitely huge flashing signs. Only the media, based 100% on the words of the banks and insurance companies, thought that a crash was undetectable.
I’m not sure quite what it would look like yet, but I’m willing to bet if you look where these data centers are being built, when the cash runs out to keep the whole scam afloat, these big companies will stop paying their bills. The smaller companies providing services and supplies will run out of money before the huge mega corpos start showing signs, so that is one of the metrics I’m watching closely. I just happen to live in the shadow of these data centers so I’ll be pretty close to it, that is if I’m right.
One of the first deals I did in real estate (~2006) was a sale at 115% loan-to-value, no money down, seller-paid closing costs. The buyers received $2500 at closing. Nobody batted an eye.
I remember the news reporting about record breaking amounts of mortgage defaults in like 2007 as well. The signs were all there, but people were too oblivious or high on their own supply of farts to see them.
Anytime people are like “we couldn’t see this coming” I never understand why they are allowed to pass that obvious lie off in public.
The AI bubble signs are in plain view everywhere you look right now. If (or much more likely when) it bursts everyone will be talking about how they couldn’t possibly see it coming again.
If people say they couldn’t see this shit coming, maybe their myopic asses shouldn’t be in charge of anything important ever again.
There was quite a lag between the variable-rate mortgage rates going up and everything noticeably exploding, so lots of people who were aware there was a real risk of things going tits up decided that it hadn’t and therefore wasn’t going to and had stopped looking for signs by the time they started to appear.
I think the idea is that, whilst shorting, you get squeezed. The question is not ‘if’ but ‘when’ and if it takes too long and you’re $1B deep you can lose your shirt
Yep. The market can stay irrational etc
The thing is though as long as it goes down that’s usually all you need. You don’t need a total collapse.
That’s the thing though, options are generally relatively short in duration, with most being a few months. The longest options are around 1-2 years out.
Could AI stay keep its hype for 1-2 years? Probably. Will it? Who knows!
The fact that he was even able to make that bet is incredible. How deluded do you have to be to think the AI bubble won’t burst?
Nobody believes the AI investment/growth trajectory we have right now will continue for infinity. What nobody knows is: when the correction will occur.
- Do you pull your investments out now and sit on the sidelines waiting for the fallout while your principal loses value daily from inflation?
- What does the correction look like when it happens? Does all the value evaporate on day 1, the first week, a month? This is important to figure out for this strategy to know when to go back in.
This is the info/decisions you’d need as an average investor. What Burry is doing is the riskiest type of investments with shorting the market. If growth continue to occur he and his fund will have to pay for the growth to those whose shares he borrowed to short.
In summary, its not enough to know that a bubble exists, but to profit from it you have to figure out when it will burst and when the full burst is done.
I think, AI quality aside, it’s mostly a matter of timing - IMO the AI bubble is obviously going to pop, NVIDIA’s market cap is now 16% of the entire US GDP and OpenAI is trying to IPO at a trillion dollars, which seem like ludicrous numbers to me. But I learned from the last few years that you can also never really underestimate society’s ability to just say fuck it and kick the can even further down the road.
And of course, SOMETHING is going to have to be the final straw that brings it all down, and it could very well be this. But I also didn’t think we’d get this far - the 2008 crisis didn’t do it, COVID somehow didn’t do it, but these things are are also all compounding as we don’t deal with them properly. And if AI is going to be the last straw, how long can we put it off for? Could it pop next year or can we still hold it off for another decade with even more ludicrous number-fuckery? I think that’s where the trick is going to be.
And if AI is going to be the last straw, how long can we put it off for? Could it pop next year or can we still hold it off for another decade with even more ludicrous number-fuckery? I think that’s where the trick is going to be.
The thing that boggles my mind in all of this is the possibility that Trump installs some absolute toady tool bag in at the Fed and then just has the federal reserve bail out all of the bad investments. It’d mean probably hyperinflation, but who cares about normal shmucks trying to live a life? It’s much more important to pay the genius, scammy billionaires so they can keep their mega yachts fully gassed and assed.
The market can remain irrational longer than you can remain solvent.
everyone can see the AI BS right out in the open
To me it is four things in particular:
- How AI use erodes skills in the subject AI is being used to assist in. This is a 100% occurrence, and has been demonstrated across all industries from software developers to radiologists. Most experience a 10-20% erosion in their skill set within the first 12 months of AI use, but others in the study groups have seen up to a 40% erosion in their skill sets.
- How AI use shuts down critical thinking, and makes users more stupid. This is a 100% occurrence, and has been clearly demonstrated by MRI scans of the prefrontal cortex while users are actively using AI.
- How AI use makes the user slower. This is the only user point that is not 100%, as only less than 2% of the most senior and skilled users show a slight increase in work completed… after more than 12 months of using AI. Projections have been made on the other 98%, and over 90% of them will never work faster with AI than without it, regardless of training or experience.
- The gratuitous hallucinations, which are only increasing in scope and severity with every AI generation. It arises entirely from the constraints the AI are rewarded with - providing no answer is weighted just as negatively as a wrong answer - and anywhere from 60-80% of all responses are hallucinatory or incorrect in some fashion, depending on the current model.
In prior generations, any industry with such performance would be laughed clear out of the boardroom.
But because capitalism is desperately seeking a solution to what they perceive as a problem - how to obtain labour without having to pay said labour - AI is being adopted hand-over-fist.
After all, the underlying purpose of AI is to allow wealth to access skill while removing from the skilled the ability to access wealth.
Investors have been happy to incentivise companies to hire idiot CEOs and managers who say the right buzzwords but reduce output by making bad decisions and only hiring people who don’t think they’re bad decisions, so an automated buzzword-dispensing idiot isn’t necessarily going to seem to investors like a downgrade compared to what they think most workers are. They’re just as likely to think AI lets them invest in companies where even the lowest tier employees are potential CEO material, and continue not noticing that the per-employee efficiency keeps going down. Data showing that layoffs nearly never pay for themselves doesn’t stop stock prices soaring whenever one happens, so I wouldn’t expect data showing AI makes companies less profitable to stop stock prices going up when a company announces a new dumb way they’ll use it.
Ugh… Minor rant.
My aunt is into tech like me. She dived head first into the AI in the middle of the hype instead of during IoT era when machine learning (the foundation of GPT models) was part of a larger SDK for building smaller tasks. Now she won’t stop pushing it onto my mom like a salesman by saying she should do this and that with ChatGPT or whatever, and it’s so freakin’ annoying.
Luckily, I’ve told my mom straight up to not buy into it.
Huh. Never noticed the MLM parallels of the current AI hype so much before. Literally levenschtein distance of one, should’ve spotted it.
Do you have references for these claims? I believe you, but I’d like to know more.
All this you listed is the reason why we are fucked if we keep depending more and more on “this” AI and don’t get a revolution in the AI field to replace the current one with AGI. Because in ten years we risk losing a big chunk of expertise and if we don’t have an AI that can really replace the current one with something that can actually replace experts then there will huge infrastructure problems across multiple industries.
Rich dumbasses found a place to waste all their money instead of the government taxing them and using that money for important things. they let them waste it on some climate change accelerator
The simple fact that somebody was able even to bet a billion is insanity that should never be possible to begin with.
Nobody should have a billion dollars, let alone have so much that you can just safely bet a billion dollars
Them he’s betting.yhst the economy will crash, basically, and we’re okay with that shit.
All of this should be illegal as fuck, and this guy belongs in a jail cell
I’m not sure you understand what this article is or how our markets work.
The simple fact that somebody was able even to bet a billion is insanity that should never be possible to begin with. Nobody should have a billion dollars, let alone have so much that you can just safely bet a billion dollars
He doesn’t have a billion dollars. He’s a hedge fund manager that manages (at least) a billion dollars collectively of other people’s investment money. Its that money he’s betting.
Them he’s betting.yhst the economy will crash, basically, and we’re okay with that shit.
No, he’s not. He’s betting against only two companies: Nvidia and Palantir. He has a relatively small bet against Nvidia ($187.6 million), and HUGE bet against Palantir ($912 million). I’m not sure I’d bet against Nvidia yet, but Palantir is co-founded by Peter Theil, trump’s deputy chief of staff which job has a large influence on White House policy. If you ever watched the TV show The West Wing, this would be the Josh Lyman character’s job.
We already know trump’s favor swings widely and if politics are going against trump (as recent news show) then its not unbelievable that Theil might get the boot or at least trump would punish Theil by killing lucrative government contracts to buy Palantir services.
All of this should be illegal as fuck, and this guy belongs in a jail cell
The point of shorting a stock exists so that the market can express a view that they believe a stock will fail. This is an important “canary in the coal mine” for the rest of the market. The other option is a policy that you can’t criticize a company with any meaning and investors continue to put money into failing/risky companies without this important indication of the risk.
Frankly I don’t like your idea of jailing someone that says “The emperor has no clothes”.
Them he’s betting.yhst the economy will crash, basically, and we’re okay with that shit.
Why should someone not be able to short some stock? The AI bubble will burst anyway.
Also, he doesn’t have one billion dollars, he manages an investment fund that people collectively put a billion dollars (or more) there.
Some guy spending a billion dollars on pretty much nothing makes me deeply annoyed. Tax billionaires.
He famously isn’t rich. He manages the money of the rich, he himself is only well off. This isn’t his money he’s investing, it’s the money of the people he works for. So there’s obviously some market feeling that this is a good bet.
Also, the way short positions work is that the people who are most successful at shorting a stock are the ones who have a megaphone to announce they’ve shorted the stock. They go on as many podcasts, news shows, interviews, etc. as possible to say things are going to crash. Because, the more people who hear about it, the more hesitation there will be to invest, which means the more chances of their prediction coming through.
So, he’s not just some guy who is betting on the bubble bursting, he’s a guy who is now heavily incentivized to cause the bubble to burst so he can make his investors a lot of money.
He’s a multi millionaire, that’s far more than just well off
Yeah, I read that he has somewhere around $300M. Not a billionaire, but not poor.
You must be annoyed A LOT these days. It seems that spending a lot of money on nothing is the latest trend for these people.
But spending it on their own terms. They would spend $100,000 on lawyers and lobbying to avoid paying $20,000 of new taxes.
Because it sets a precedent. If the $20k taxes go through, why not some $120k ones in the future? At the very least, this is their logic.
Good thing Burry isn’t a billionaire, he’s a fund manager.
true, lucky he is only worth hundreds of millions…
Capital gains are taxed. Profits from this are capital gains.
Market is so fake and manipulated that I no longer have any interest in investing in it. Like always for decades now it is a transfer to the wealthy system.
My plan is to stay invested until dividends hit in December, and then I’m going to evaluate moving my investments into a money market or bonds. Amazon’s numbers show that consumers are still buying, and my assumption is that consumer spending will hold off the pop for now.
I 100% expect a massive crash, and when it’s just seven companies propping up an entire economy, the pop is going to be very bad. I’d rather lose a little value in the short term than have my portfolio drop to a calamitous degree and have to wait 5-10 years for it to recover.
*not a FA, just my personal plan
I stopped putting money into us equities and started to put them in purely international index funds. I havent sold anything though.
You think the US economy going totally tits up won’t take the rest of the world with it to some degree?
I know, but i figure my lossrs will be more controlled and my recovery smoother
Yeah, this economy has given me the heebie-jeebies for the last quarter now.
Unless you’re a billionaire or on a signal chat in Washington, I don’t know how you can feel good about what’s happening.
I’m waiting for my sweet 200 in tax returns and rolling it into scratch tickets.
May the odds be ever in your favor.
Mid-Cap index funds should be fairly insulated from the damage as well, given they would exclude companies as large as nVidia.
Either way, biggest thing people is when the bubble pops, that is the time to buy in more, not the time to sell. The buy high-sell low strategy is easy to fall into emotionally.
that is the time to buy in more, not the time to sell.
1000000%
That’s the other side of my strategy, having my portfolio in cash means I can reinvest at the new fire sale prices.
I was able to pay off my student loans by buying oil stock at a 90% discount in March 2020 and then waiting a few years for the rebound. You don’t even need to be rich to do it, just patient.
I wish I could convince SO to do this with our funds but they will just say im a doomsdayer
The good news is. Even if you don’t change your strategy, you can just chill on index funds. When the bubble pops, they will go down, just keep buying more. In the long term, you will still make money. US index funds earn ~8% per year on average when invested for long periods of time.
Yeah, agreed. Just buy monthly a fixed amount of money in index funds. When it goes down, some people will double it.
I made the mistake of selling when covid hit and the market went down. I started buying again when the market was doing OK again. So I made two mistakes: sold low, bought high.
Oof, yeah. Having to make group decisions with money is tough.
Partly why I love being single and childless.
Its not a question of “if” but “when.”
and whether he has enough liquidity to maintain his margin during absolutely insane market distortions by hedge funds, big banks, and the government.
And when it pops it will be a big bang in the entire global economy from what i heared and read.
I mean, the housing bubble burst and the government pulled 7 trillion out of its arse and handed it back to bankers, doubling the cost of current living from the knock-on inflation. Life went on, and not a single banker (except maybe some lackey in Iceland) was punished. The Rich got exceedingly wealthy after the crisis.
This time: the government will pull 50 trillion from its arse and hand it back to investors. Life will go on, no one will be punished, the cost of living will be a few times higher than what it is now, and the rich will get richer.
My interpretation: the big investors fully expect the bubble to burst and hope to win from the fallout/bailout. It’s win-win for them.
I was wondering about the source for this figure. For the curious, it comes from a private report from an independent consulting firm in the UK called MacroStrategy Partnership. I found this article talking about it, dated 2025-10-3.
True Edit: which government are you talking about with “the government”?
Any. If it happened under Obama, it will most certainly happen under Trump
Thats quite the US centered perspective
I’m from the UK/Germany. The dollar is a worldwide currency with far reaching impact
Germany had the same financial crisis around that time with a 70 Mrd € bailout as I’m sure you remember
