JPMorgan Says Michael Burry Is Dead Wrong About AI

"Michael Burry first grabbed headlines for his bold short against the U.S. housing market in the mid-2000s, predicting its collapse and profiting massively when the subprime mortgage crisis hit in 2008. That trade - immortalized in the book and movie " The Big Short " - turned him into a Wall Street legend. But Burry had been a sharp investor long before, starting as a value-oriented trader in the 1990s"

"through his Scion Capital hedge fund, where he focused on undervalued stocks and contrarian bets. His medical background as a neurologist added an analytical edge to his market views. Recently, Burry shocked investors by placing large bearish bets against Nvidia ( NASDAQ:NVDA ) and Palantir Technologies ( ), buying put options that signaled his skepticism toward the artificial intelligence (AI) boom. These moves suggested he sees overvaluation in AI stocks amid hype."

"JPMorgan's recent report dives into the economics of the AI infrastructure build-out, painting a picture of sustained expansion rather than a bubble ready to burst. While the bank didn't name Burry directly, its optimistic outlook counters his bearish stance on AI-related stocks. The analysis focuses on the capital expenditures needed for AI and the returns they could generate. At the core is a sensitivity analysis showing the revenue required to achieve various hurdle rates on AI investments over the next five years."

Michael Burry rose to fame by shorting the U.S. housing market and profiting during the 2008 subprime crisis. He later ran Scion Capital as a value-oriented trader, applying analytical skills from his neurologist background. Recently Burry bought large put options against Nvidia and Palantir, signaling skepticism about AI stock valuations. JPMorgan published an optimistic analysis of AI infrastructure economics, performing a sensitivity analysis of required revenue to meet investment hurdle rates. JPMorgan estimates about $650 billion in annual AI revenue would yield a 10% return, roughly 0.58% of global GDP. The bank argues consumers will not bear the full cost.

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