The 'Big Short' Warns AI Stocks Frenzy Nears Dot-Com Bubble's End

Michael Burry, the real-life prototype of the main character in the movie "The Big Short", warned in his Substack article released on May 9 that the current market's infatuation with AI is beginning to resemble the final stages before the burst of the Internet bubble in 2000.

On May 8th, US stocks continued to rise following a slightly better-than-expected April non-farm employment report, with the S&P 500 and the Nasdaq reaching new historical highs. However, the consumer confidence index also hit an all-time low on the same day, and the market hardly responded to this negative signal.

According to traditional logic, macro data such as employment and consumer confidence would affect corporate earnings expectations and risk preferences, but now traders are more focused on whether the AI narrative can continue to drive stock prices higher. Burry wrote:

“The ups and downs of stocks have become irrelevant to employment or consumer confidence; they are straight up because they are straight up. Based on what everyone thinks they understand: the two-word AI... It feels like the last few months before the bubble burst of 1999-2000.”

The semiconductor sector has amplified the market divergence. The Philadelphia Semiconductor Index rose more than 10% this week, with a year-to-date increase of 65% in 2026, and Burry also compared its recent trajectory to the upward movement before the tech stock crash in March 2000.

This round of market sentiment is no longer dominated by Nvidia alone. The rise has spread to chip stocks like Intel and Qualcomm, which have been lagging behind, and the market's focus has expanded from GPUs to more AI hardware segments such as memory and CPUs. This indicates that the market is no longer trading on individual company performance but on the imagined expansion of the entire AI infrastructure.

Legendary Wall Street macro hedge fund manager Paul Tudor Jones also sees a market structure similar to 1999, but his judgment is not as direct as Burry's. He believes that the bull market may last for another one to two years; however, if the stock market rises by another 40%, the ratio of the total market value of US stocks to GDP may reach 300% to 350%, leading to a very severe correction.