Michael Burry fired off a warning about the AI boom in a “Lord of the Rings” wrapper on Sunday, and teased that he’ll release more of his contrarian research in the coming days.
“One chart to refute them all … to be continued Nov 25th, or before,” the investor of “The Big Short” fame posted on X.
He attached a column chart tracking the S&P 500’s total capital expenditures over the past 35 years, with depreciation subtracted and amounts divided by nominal US GDP — likely to keep the focus on new investments and show them as a share of the economy’s total output.
Burry’s chart shows that stocks have peaked in the middle of past investment booms, while capital spending has kept climbing or remained elevated for another year or two before collapsing. The broader implication is that periods of overinvestment are inevitably followed by corrections.
The chart highlights the Nasdaq index’s peak just before the dot-com bubble burst, the S&P 500’s peak just before the housing bubble popped and sparked a global financial crisis, and the S&P Energy index’s peak just before oil prices crashed and the energy sector entered a prolonged downturn.
Burry also highlights the Nasdaq 100’s record high of around 26,000 points this quarter, suggesting he thinks that could be the market’s peak in the middle of this capital cycle.
His chart serves as a warning that stocks may have already topped out even as OpenAI, Meta, and other AI giants prepare to invest trillions of dollars in microchips and data centers as they jostle for position in the nascent AI market.
If the pattern repeats, Burry’s chart implies, AI companies will continue spending big for at most two years before the investment boom crumbles, and there could be a stock market crash and a recession on the cards.
Burry has been wrapping his warnings with sci-fi and fantasy memes and quotes
The Scion Asset Management chief attached a meme from “The Lord of the Rings” to his X post. It shows Gandalf the Grey asking Frodo Baggins, “What can you see?” while looking at The One Ring, but instead of an inscription about the immense threat and power contained within the ring, it reads “Live Love Laugh” instead.
Burry may have deployed the meme to emphasize how complacent and blindly optimistic investors have become about the AI boom, to the extent that they only see good times, not warning signs.
The investor is best known for predicting and profiting from the collapse of the US housing market, after his contrarian bet was chronicled in the book and movie “The Big Short.”
Burry went silent in April 2023 after repeatedly sounding the alarm on X about a historic asset bubble and a looming crash and recession. He’s made a colorful comeback since October 30, posting several warnings about the AI boom using “WarGames” and “Star Wars” memes and quotes, revealing third-quarter bets against Nvidia and Palantir, trading barbs with Palantir CEO Alex Karp, and terminating his hedge fund’s SEC registration, teasing that he’s now “unchained” and moving “on to much better things.”
In one post last week, Burry shared a still from “The Big Short” where he, portrayed by Christian Bale, lies on the ground exhausted, encircled by annotated mortgage prospectuses and other research items.
Me then, me now. Oh well.
It worked out. It will work out pic.twitter.com/vaordNav8d— Cassandra Unchained (@michaeljburry) November 12, 2025
“Me then, me now. Oh well. It worked out. It will work out,” Burry wrote, indicating that he’s immersed in AI research but confident he’ll be proven right once again.
Burry shared on Monday that he’ll soon be appearing on a podcast hosted by “The Big Short” author Michael Lewis to mark the 15th anniversary of the book and the 10th anniversary of the movie.
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