Michael Burry, he of The Big Short fame, has become the latest voice to draw comparisons between the ongoing AI technology rally and the dying days of the dotcom boom. In a Substack article published earlier this month, he warned of a yawning disconnect between market sentiment and fundamental analysis, pointing out that prices for AI stocks have been “going straight up because they have been going straight up”.
Critics of Burry have suggested that he has taken a scattergun approach to his various doomsday predictions through the years, so his mixed record must be seen in that context. He defended his market calls in a subsequent Substack article, suggesting that his reputation (in some quarters) as the “boy who cried wolf” was not only wide of the mark, but based on distorted and deliberate misrepresentations on social media.
He may have a point, yet you could argue that he’s been dining out on his call on the US subprime housing crash for some time. But his warning is in line with other cautionary, though slightly more measured, appraisals from the likes of Alphabet (US:GOOGL) boss Sundar Pichai, who has pointed to “elements of irrationality” in the market – a lovely phrase.
