The Big Short Investor Who Predicted 2008 Says This Is Worse...

"Michael Bur revealed that he placed a $1 billion short, a $1 billion bet against Nvidia and Palanteer because he believes this bubble is about to pop."

"Michael Bur says AI stocks are a massive bubble that's about to pop"

"Michael Bur is trying to point out that cloud computing growth, which is the backbone of artificial intelligence, is starting to slow down because we're seeing Amazon, Alphabet, and Microsoft seeing a slowdown in growth in cloud computing."

"The artificial intelligence industry is replacing a lot of human jobs. ... AI is taking jobs faster than it's creating jobs."

"Goldman Sachs says the AI trade is going full throttle. A positive energy that is driving up the broader stock market, but it will slow down."

"corporate AI investment grew from $103 billion in 2019 to about $252 billion in 2024, which is an increase of around 2 and a half times over those 5 years."

"Today, the NASDAQ, which is still primarily comprised of tech companies, which are now primarily AI, has a PE ratio average of about 35 times earnings, which is a lot lower than where we were leading up to the dotcom bubble, but it's still higher than the average because the average historical NASDAQ PE ratio is 20 times earnings."

"Today, the Magnificent 7, which is a group of the seven largest tech companies... those seven companies alone make up 34% of the S&P 500."

"Today the Federal Reserve Bank is not raising interest rates. They're actually lowering interest rates as a way to spur spending into AI investing to make the bubble even bigger. And to encourage banks to lend more money, the Federal Reserve Bank is also ending quantitative tightening come December 1 as a way to make money more accessible."

"Goldman Sachs... says that we've seen so much AI investment chasing high valuations. If it slows down, the whole market can come down."

"if we're producing products but people don't have money to buy those products, that's a problem."

"Investors have very high expectations for where these AI stocks need to go. And if companies don't meet these sky-high expectations, that could mean less dollars go into those companies."

"we've seen so much AI investment chasing high valuations."

"the dot bubble burst, which caused the major.com bubble crash that happened between 2000 and 2002."

"the NASDAQ fall by more than 70% over a couple of years."

"How long will that last? Who knows? But that's what we're seeing right now."

"if companies slightly miss expectations, it can cause a big downturn in the stock itself."

"there are some major players in the AI industry that are dominating and it's kind of like every AI company is just feeding each other."

"the amount of dollars going into AI stocks resembles the amount of dollars going into dotcom companies."

"there is a saturation of value within a few key tech stocks."

"Michael Bur revealed that he placed a $1 billion short, a $1 billion bet against Nvidia and Palanteer because he believes this bubble is about to pop."

"Michael Bur says AI stocks are a massive bubble that's about to pop and he's putting his money where his mouth is."

"we are seeing the same type of investment today in AI that we saw leading up to the dotcom bubble bursting."

"Michael Bur points out that we're starting to see slower growth in this AI industry. Take a look in this chart. Michael Bur is trying to point out that cloud computing growth, which is the backbone of artificial intelligence, is starting to slow down because we're seeing Amazon, Alphabet, and Microsoft seeing a slowdown in growth in cloud computing."

"corporate AI investment grew from $103 billion in 2019 to about $252 billion in 2024, which is an increase of around 2 and a half times over those 5 years."

"Today, the NASDAQ, which is still primarily comprised of tech companies, which are now primarily AI, has a PE ratio average of about 35 times earnings, which is a lot lower than where we were leading up to the dotcom bubble, but it's still higher than the average because the average historical NASDAQ PE ratio is 20 times earnings."

"Today, the Magnificent 7, which is a group of the seven largest tech companies, including Apple, Microsoft, Amazon, Alphabet, Meta, Nvidia, and Tesla, those seven companies alone make up 34% of the S&P 500. So, we have much more saturation of value into a few companies than we had before. And Nvidia by itself makes up more than 7% of the value of the S&P 500, which again shows more concentration today than we had before."

"Here are three possibilities that you want to keep your eye on. Possibility number one is the job market. The artificial intelligence industry is replacing a lot of human jobs. So although the industry is booming, although the adoption is booming, although company profits are growing because of AI, there's less and less human need. Now, that doesn't mean there's not going to be a need for humans. But what that means is the adoption rate for human jobs with AI is growing slower than the reduction of human jobs. Or in plain English, today AI is taking jobs faster than it's creating jobs."

"People who are investing the money into AI stocks are expecting companies to produce big gains, big profits, and huge returns. This has been the ongoing trend for the last number of years. And this is now getting to the point where if companies slightly miss expectations, it can cause a big downturn in the stock itself."

"Goldman Sachs says the AI trade is going full throttle. A positive energy that is driving up the broader stock market, but it will slow down. At the end of the day, any asset, whether it's an AI stock, whether it's gold, whether it's a house, whether it's this marker, it's worth what somebody else is willing to pay for it. If you think and everybody else believes that this marker is worth $1 and I cannot sell it for $1, I can think it's worth a thousand dollars all day and night long. But if no one's willing to pay me more than a dollar for it, it's only worth a dollar. So if AI stocks are worth high valuations because people are willing to pay these high valuations because they believe that there's going to have a lot of growth potential in the future, that can help support these high valuations. But if those expectations start to go down, people say, you know what, it's not worth the value anymore. I'm not willing to keep investing these super high valuations. Well, then that can cause valuations to go down."

"Michael Bur, the famous investor who predicted the 2008 housing market crash, has predicted a number of warnings since then. The warning that he's predicting right now is AI stocks and he's putting his money where his mouth is. He made a major bet against Nvidia and Palanteer because he says the AI valuations are too high."

"Chart number one was where he explained that the amount of dollars going into AI stocks resembles the amount of dollars going into dotcom companies. And generally when you see such a large investment into any industry, it is then followed with some sort of recession."

"The second chart that he showed was a closed loop that there are some major players in the AI industry that are dominating and it's kind of like every AI company is just feeding each other. So the money looks like it's a lot of money going into AI when the money is just circulating between a few key players."

"Needle number one is jobs. Because right now AI is ending jobs faster than it's creating jobs. How long will that last? Who knows? But that's what we're seeing right now. And if people don't have incomes to buy the products that we're producing, that could create an economic problem."

"Number two is expectations. Investors have very high expectations for where these AI stocks need to go. And if companies don't meet these sky-high expectations, that could mean less dollars go into those companies."

"And number three is value exhaustion which goes handinhand with expectations which is Goldman Sachs, Morning Star, and a number of other institutions are talking about how when you have these super high valuations, these big runups, eventually people get tired of these high valuations and they're not willing to pay these high valuations and that's when the dollars stop going in."

"It is getting harder than ever for the average person to get a job and build wealth because traditional entry-level skills are now being automated by AI. But this is the silver lining because for those of you that are go-getters that want to go the extra mile, this shift is going to create more millionaires than ever before."