Burry Cites 98% RCA Collapse, Flags 20% Profit Inflation from Alphabet AI Spending
Investor Michael Burry compared Nvidia's AI-driven rally to RCA’s 98% crash, warning of boom-and-bust risk. He questioned whether Alphabet’s AI data-center spending—reported to inflate profits by around 20%—will deplete cash flow and force extra borrowing.
1. Burry Compares AI Rally to 1920s RCA Crash
Investor Michael Burry highlighted that RCA’s stock surged roughly 200-fold in the 1920s before collapsing 98% by 1932, implying that Nvidia’s current AI-driven run-up could follow a similar boom-and-bust trajectory.
2. Concerns Over Alphabet’s AI Infrastructure Spending
He raised doubts about Alphabet’s massive AI data-center investments—cited as inflating profits by about 20%—warning that sustained capital expenditures may erode cash flow and necessitate additional borrowing.
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