Michael Burry, the real-life inspiration for the film "The Big Short" and famous for accurately predicting the 2008 subprime mortgage crisis, once again spoke highly of artificial intelligence on Monday. The AI bubble has issued a more severe warning, and has also impacted Nvidia, the "AI giant." Cisco during the dot-com bubble burst Comparable to (Cisco).
In an article titled "The Cardinal Sign of a Bubble: Supply-Side Gluttony," he argued that the AI boom was a "brilliant folly," and pointed out that Nvidia was a harbinger of when he predicted the industry bubble would burst.
"Foolish things can make money. Creative destruction and insane stupidity are what made the U.S. the world's innovation hub. Companies are allowed to over-innovate to the point of extinction. And more companies spring up like mushrooms after rain, continuing to do the same. Sometimes, the new company is simply a product of the same company's transformation," he wrote.
Burry explained that during the dot-com bubble, the tech industry was characterized by "large, highly profitable publicly traded companies, including what were then known as the Big Four— Microsoft..." , Intel "Dell and Cisco ." Similarly, he believes there are five publicly traded giants in the current AI boom: Microsoft , Google, Meta, Amazon , and others. and oracle bone script .
It's worth noting that Burry specifically points out that Cisco was a company on the verge of the dot-com bubble bursting. Between 1995 and 2000, the tech company's stock price soared by 3800%, making it the world's most valuable company with a market capitalization of approximately $560 billion. However, it was also this same tech company whose stock plummeted by more than 80% at the turn of the century.
Today, Burry believes that the booming development of artificial intelligence is repeating history: a Cisco-like company is once again at the heart of it all, possessing not only the necessary tools and resources but also a grand vision to match. And its name is now Nvidia .
Similar to Cisco's record-breaking market capitalization 25 years ago, Nvidia has now become the world's most valuable company, with a market capitalization of approximately $4.5 trillion. And it's not just Burry who's worried about this; Morgan Stanley... Lisa Shalett, chief investment officer of Morgan Stanley Wealth Management, also expressed concern about the company's ever-expanding market capitalization.
In a media interview this September, she expressed concern that the industry might experience a "Cisco moment" in the next 24 months. Shalett explained that the tech companies surrounding Nvidia "are beginning to intertwine," forming a cyclical financing model.
For example, Nvidia pledged $100 million to OpenAI in September and announced last week that it would invest $10 billion in Anthropic. In return, Anthropic will invest $30 billion to scale its Claude AI model on Microsoft 's Azure cloud platform, which is based on Nvidia technology.
“These ongoing investments have actually created a huge network of AI companies, with billions of dollars constantly flowing back and forth between them,” she added.
Nvidia CEO Jensen Huang recently dismissed concerns about a bubble and revolving financing, stating that the company has not yet allocated any funds and that its planned investments represent only a "small fraction" of its revenue.
“For the first time in nearly sixty or seventy years, we have completely revolutionized computing technology. As a result, all computers installed around the world are being modernized to support accelerated computing, video GPUs, and artificial intelligence. This development will benefit us immensely for many years to come,” he said.
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(Article source: CLS)
