America’s biggest investor Michael Burry, who is known for predicting the popular 2008 housing crash and portrayed in The Big Short, has now issued a stark warning about US stocks. According to a report by Business Insider, in his latest Substack post, Burry said he sees the risk of a rapid unwind driven by automated volatility-focused investment funds, which could unleash “carnage” across the market. Burry pointed to the recent plunge in momentum stocks — high-flying chipmakers and memory names as a preview of what could unfold. The iShares MSCI USA Momentum Factor ETF has dropped 14% from its peak, underscoring how quickly profits can evaporate when investors rotate out of overheated trades. “That leaves a bloody mess, but most would not be looking for it,” Burry warned.
American investor Michael Burry on volatility at 98-year high
According to Burry, markets are showing an “asymmetric and out-of-proportion severity” on down days, with fear levels climbing to their highest in nearly a century. He argued that automated trading programs are fueling both sharper selloffs and faster rebounds, creating chaotic conditions no human investor would replicate.Burry estimated volatility-targeting funds hold about $500 billion in assets, a fraction of the $60 trillion U.S. stock market but still large enough to spark systemic stress if forced to sell simultaneously. He outlined a scenario where a mild 2.5% S&P 500 drawdown could prompt funds to slash exposure from 77% to 50%, amplifying losses and triggering stop-loss cascades.
Michael Burry is not happy with reports of Nvidia investing $250 billion in OpenAI
Recently, Michael Burry voiced his sharp criticism of reports that Nvidia is preparing a a $250 billion backstop for OpenAI’s massive Ohio data-center project. According to a report by the Wall Street journal, the guarantees would help OpenAI lease a 10-gigawatt site being developed by SoftBank’s SB Energy, with total costs potentially exceeding $500 billion. Burry’s complaint echoes what analysts have long warned about in AI megadeals: circular funding arrangements that expose investors to enormous risk if sentiment shifts or growth slows. Nvidia, already valued at $5 trillion, has invested $30 billion in OpenAI and is now considering financing chip purchases worth another $350 billion. Critics say such structures could leave the industry vulnerable, especially since OpenAI remains unprofitable and lacks an investment-grade credit rating.Michael Burry’s criticism underscores growing unease about the sustainability of $100 billion-plus AI financing structures. His warning suggests that while AI demand is surging, the industry’s reliance on complex guarantees and debt-backed megaprojects could become its biggest vulnerability.
