Source: Jinshi Data

Michael Burry, the prototype of the "Big Short" known for predicting the U.S. real estate market collapse, has warned that the current stock market obsession with artificial intelligence is beginning to resemble the final stages before the internet bubble burst.

In an article published on the Substack platform last Friday, Burry wrote that during a long drive, he was listening to financial news and radio programs and felt that “everyone was endlessly talking about AI, and no one was discussing anything else all day.”

The investor, best known for successfully predicting the collapse of the U.S. real estate market, stated that the stock market no longer responds logically and substantively to economic data such as employment reports or consumer confidence.

Last Friday, the S&P 500 index reached an all-time high due to traders focusing more on the slightly better-than-expected April non-farm payroll report rather than the record-low consumer confidence index.

However, Burry wrote that the rise and fall of stocks are not due to employment or consumer confidence, “they are rising simply because they have been rising, behind which is a two-letter conclusion that everyone thinks they understand... it feels like the last few months of the bubble from 1999 to 2000.”

Burry compared the recent performance of the Philadelphia Semiconductor Index (SOX) to the rise before the tech stock collapse in March 2000. The index rose more than 10% last week, bringing its cumulative increase for 2026 to 65%.

As Burry made these remarks, investors have poured heavily into AI-related stocks over the past two years, pushing major U.S. stock indices to new highs. Semiconductor companies and large tech stocks related to AI infrastructure and software have led this rally, with the enthusiasm for generative AI driving a sharp increase in valuations.

Legendary macro trader, founder and chief investment officer of Tudor Investment Corporation Paul Tudor Jones also compared the current AI-driven rise to the period before the internet bubble burst, although he believes there might still be room for further gains in this bull market.

Jones stated on CNBC's "Squawk Box" program that the current environment feels like 1999—approximately a year before tech stocks peaked in early 2000, and he estimates this rally could last another year or two.

At the same time, Jones also warned that if valuations continue to expand, the eventual correction could be very severe.

Jones remarked, imagine if the stock market increases by another 40%, then the ratio of stock market capitalization to the total economy (GDP) could reach an astonishing 300% or even 350%. “Everyone understands that at that point, there will definitely be some kind of stunning adjustment.”