'Big Short' Michael Burry Says Openai, Anthropic Want To Join Big Tech's Oligopoly - But Much Of AI Spending May Become 'Sunk Cost'

• Burry argued that AI infrastructure spending could become uneconomical as token use and computing needs compress.
• The investor said OpenAI and Anthropic want to join an AI oligopoly dominated by Big Tech, but questions whether that ambition is sustainable.
• His bearish stance comes as Nvidia hits record highs and investors regain confidence in the broader technology trade.

“The Big Short” investor Michael Burry is doubling down on his bearish view of the AI infrastructure boom, warning that much of the billions being poured into data centers and computing capacity could ultimately become“sunk cost.”

In his latest Substack blog post published on Wednesday, Burry argued that“compression” will eventually play a role in making some of today's massive AI investments uneconomical.

“Ultimately, compression will do its deed, and much of what is being spent will be just so much sunk cost,” Burry wrote.

He did not elaborate on exactly what he means by“compression.” In a previous post, Burry described“compression is what happens when the benchmark phase ends and companies start to reduce third party token overuse.”

The comments come as AI companies and hyperscalers continue to commit hundreds of billions of dollars toward AI development, GPUs, data centers and other infrastructure. In the blog, Burry broadly argued that the market could be heading for a sizable correction in the coming months.

OpenAI, Anthropic Want Into AI Oligopoly

Burry said OpenAI and Anthropic want to“expand a monopoly” and join the ranks of Microsoft, Amazon, Google and Meta Platforms, but warned that their ambitions may not ultimately materialize.

“They intend to be part of the oligopoly. None can imagine breaking the dominance of a Microsoft, Amazon, Google, or Meta within each silo,” he said.

“I give these companies (OpenAI and Anthropic) less credit than all that. I grant them the craven desire to expand a monopoly, to join an oligopoly. But this is a want, not a need, and human thought is far too redundant for what is being built.”

Hyperscaler capital spending is expected to approach $800 billion in 2026 and could top $1 trillion in 2027. That spending has created a powerful multiplier effect for semiconductor and networking companies, boosting their financials and stocks.

Burry Questions AI Infrastructure Boom

Burry has been a prominent critic of the AI infrastructure boom and the ensuing surge in valuations of chipmakers and AI labs.

In a recent comment, he said that the stock market is repeating patterns seen before the 2000 dot-com bust and the 2008 financial crisis, with investors still in the“denial” phase despite historically high valuations. 

He said the“AI boom” would eventually turn into a bust, saying he has moved up his bearish timelines and positioning for a“2000-2003 style value revival” as the AI trade unwinds.

Burry currently has bearish positions in Nvidia, Palantir, Oracle, Micron, Nebius, the iShares Semiconductor ETF and the Nasdaq 100.

Tech Market Recovers

As OpenAI and Anthropic reportedly move towards their initial public offerings (IPOs), investor sentiment for the public tech sector appears to be improving. Nvidia Corp. (NVDA), the bellwether of the AI industry, hit a record high on Tuesday, extending the momentum seen over the past 30 days after months of choppy trading. The Invesco QQQ Trust Series 1 (QQQ) gained more than 5% over the past month.

On Stocktwits, the retail sentiment was 'neutral' for OpenAI, Anthropic, NVDA, MSFT, and 'bullish' for AMZN and GOOGL on Thursday.

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