Michael Barry attends the New York screening of ‘The Big Short’ at the Ziegfeld Theater on November 23, 2015 in New York City.
Astrid Stawiarz | Getty Images
Michael Burley of “The Big Short” fame has warned that the stock market’s obsession with artificial intelligence is starting to resemble the final stages of the dot-com bubble.
“Absolutely non-stop AI. No one talks about anything else all day long,” Barry wrote in a Substack post Friday after listening to financial reports on TV and radio during a long drive.
The investor, known for predicting the U.S. housing crash, said stocks no longer respond in a logical and meaningful way to economic indicators such as employment data and consumer sentiment. On Friday, the S&P 500 rose to a new all-time high as traders focused on April’s jobs report, which was slightly better than expected than a record low in consumer sentiment.
“Stock prices do not rise or fall based on employment or consumer sentiment,” Barry wrote. “Because they’re coming straight up. About the two-letter thesis that everyone thinks they understand. … It feels like the last months of the 1999-2000 bubble.”
Mr. Burley compared the recent performance of the Philadelphia Semiconductor Index (SOX) to the rally before the tech stock crash in March 2000. The index rose more than 10% this week, pushing its 2026 gain to 65%.
Stock chart iconStock chart icon
SOX in 2026
The comments come as investors have poured into AI stocks over the past two years, helping major U.S. stock indexes repeatedly hit record highs. Semiconductor companies and mega-cap technology companies related to AI infrastructure and software are leading the rally, with enthusiasm for generative AI fueling the surge in valuations.
Paul Tudor Jones also sees similarities between today’s AI-driven bull market and the period leading up to the dot-com bust, but believes the bull market may continue. Jones told CNBC’s “Squawk Box” this week that he feels the current environment is similar to 1999 (about a year before tech stocks peaked in the early 2000s), and he expects the stock rally could continue for another year or two.
At the same time, Jones warned that if valuations continue to expand, the final correction could be dramatic.
“Imagine if the stock market rose another 40%,” Jones said. “The stock market GDP will probably be 300% or 350%. But we know there will be a breathtaking correction.”
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