Michael Burry Warns Government Intervention Won't Stop AI Bubble Burst: 'The Problem Is Too Big To Save'

‘The Big Short’ investor Michael Burry has issued a dire warning regarding the artificial intelligence (AI) sector, predicting a systemic collapse that not even federal intervention can prevent.

Defining The Mania

In a scathing post on X, Burry characterized the current AI investment frenzy as a “mania” that is mathematically destined to fail.

Burry, famous for betting against the housing market before the 2008 crash, argues that the massive capital expenditures by the world's wealthiest corporations cannot buy enough time for AI profitability to materialize.

He explicitly warned that while the government will inevitably “pull out all the stops to save the AI bubble to save the market,” the financial hole is “too big to save, again by that very same definition.”

Financial Implosion, Diminishing Returns

Burry's bearish stance is anchored in data highlighting OpenAI's precarious financial position.

Citing analysis from investor George Noble, the report points to OpenAI losing $12 billion in a single quarter, with a projected $143 billion in cumulative negative cash flow before reaching profitability.

The company is reportedly burning $15 million per day on its video model, Sora, alone.

The critique centers on a “big math problem” facing the industry: diminishing returns. Critics argue that the low-hanging fruit is gone, and it now costs five times the energy and capital to achieve merely a two-fold improvement in model performance.

Talent Exodus vs. Re-industrialization

Compounding the financial strain is a significant “talent exodus,” including the departures of top executives like former CTO Mira Murati and Chief Scientist Ilya Sutskever.

Furthermore, ChatGPT traffic reportedly fell month-over-month in late 2025 as competitors like Google's Gemini surged.

This outlook stands in stark contrast to the “bull” narrative presented by OpenAI CEO Sam Altman and Microsoft Corp. (NASDAQ:MSFT) CEO Satya Nadella.

In a podcast from November 2025, the duo framed the trillions in expenditure not as cash burn, but as the “re-industrialization of America,” likening the infrastructure build-out to a project ten times the size of the Manhattan Project.

Burry, however, remains unconvinced, suggesting the gap between “promised revolution and delivered reality” has never been wider.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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