‘The Big Short’ investor Michael Burry warned Wednesday that today’s artificial intelligence (AI) boom could eventually give way to overcapacity, creating tomorrow’s “ghost towns.”
Today’s AI Boom Won’t Last Forever
In a post on X, Burry acknowledged that supply shortages across AI infrastructure remain real, pointing to Nvidia Corp.‘s pricing power, Caterpillar Inc.‘s (NYSE:CAT) strong performance and Palantir Technologies Inc.‘s (NASDAQ:PLTR) growing demand.
“There’s really gold in them thar hills. Just pointing out future ghost towns,” Burry said.
The AI Supply Chain Is Still Locking In Multi-Year Demand
Burry’s warning comes as companies across the AI ecosystem continue to report strong long-term customer commitments.
Micron Technology Inc. (NASDAQ:MU) in June said it had about $22 billion in customer commitments along with roughly $18 billion in cash deposits in long-term contracts, while SK Hynix Inc.‘s (NASDAQ:SKHY) President of Corporate Center Song Hyunjong last month pushed back against concerns that aggressive investment in AI memory production could lead to oversupply.
SanDisk Corp. (NASDAQ:SNDK) said its largest AI customers have already expanded multi-year agreements just one quarter after signing them, giving the company more than four years of demand visibility and Western Digital Corp. (NASDAQ:WDC) also said it is negotiating long-term storage agreements with customers extending through 2031.
Today’s Shortages Becoming Tomorrow’s Oversupply
Counterpoint Research Director MS Hwang told Benzinga that current expansion plans across Samsung Electronics Co. Ltd. (OTC:SSNLF), SK Hynix and Micron are unlikely to materially ease memory supply before 2028, keeping near-term shortages intact if AI spending remains strong.
Burry on Monday reiterated that he believes markets could be nearing a major top while maintaining bearish positions against several AI-linked companies, including Nvidia, Micron, Caterpillar, Palantir, Tesla Inc. (NASDAQ:TSLA) and the iShares Semiconductor ETF (NASDAQ:SOXX).
Price Action: NVDA closed 3.43% higher on Wednesday at $219.22 and gained a further 3.30% in early pre-market hours on Thursday.
Benzinga edge rankings indicate NVDA has a Momentum score in the 75th percentile and a Growth score in the 98th percentile.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo courtesy: Golden Dayz / Shutterstock
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