Hedge fund manager Michael Burry said that the current AI-driven stock market rally resembles the final months of the dot-com bubble [1].
Burry's shift in strategy signals a growing skepticism toward the sustainability of artificial intelligence valuations in the U.S. By exiting high-profile positions and pivoting toward international markets, he is positioning his portfolio for a potential correction in domestic tech stocks.
Burry said that he has sold his position in GameStop [2]. The decision follows the company's acquisition of eBay, which Burry said creates a significant risk to the company's capital structure [2]. According to reports, the eBay deal adds approximately $20 billion [2] of new debt to GameStop. This transaction brings the company's debt-to-EBITDA ratio to about 7.7× [2].
Market analysts said that GameStop stock has been testing its 100-day moving average [2] during this period of volatility. Burry's exit suggests that the fundamental risks associated with the new debt outweigh the potential synergies of the acquisition.
While reducing exposure to certain U.S. assets, Burry has announced new investments in Chinese e-commerce firms JD.com and Alibaba [3]. He said these stocks offer attractive valuations compared to the inflated prices seen in the U.S. AI sector [1, 3]. This move represents a strategic hedge, moving capital from perceived bubble territory into markets that he believes are undervalued.
Burry first gained global notoriety for predicting the 2008 U.S. housing market crash. His current warnings regarding the AI rally reflect a similar pattern of identifying speculative excesses before a market downturn occurs [1].
“The AI-driven rally feels like the last months of the dot-com bubble”
Burry's movements suggest a broader transition from growth-oriented AI speculation toward value-based investing. By targeting Chinese tech giants and exiting debt-heavy US retail plays, he is betting that the AI rally has reached a peak and that diversification into undervalued international markets will provide a safer haven during a projected market correction.
