Michael Burry Compares AI Boom to 1920s RCA, Flags Alphabet’s Data-Center Costs
On Feb. 22, Michael Burry compared Nvidia’s AI surge to 1920s RCA mania, whose shares plunged 98% after 1929, suggesting today's AI rally may follow. He also flagged Alphabet among peers for heavy AI data-center capex consuming cash flow, increasing borrowing and potentially masking cost pressures through adjusted accounting.
1. Burry's 1920s RCA Comparison
On Feb. 22, Michael Burry likened the current AI-driven surge led by Nvidia to the 1920s Radio Corporation of America mania, noting RCA shares soared 200-fold before plunging 98% between 1929 and 1932 despite radio’s long-term growth.
2. Alphabet’s AI Spending Concerns
Burry flagged Alphabet alongside Microsoft, Meta and Amazon for aggressive AI data-center capital expenditures, warning such capex is consuming cash flows, increasing borrowing and potentially inflating profits through adjusted accounting practices.
3. RCA's Historic Price Volatility
In its 1920s rally, RCA shares peaked at $114.75 in 1929 before collapsing to $2.625 by May 1932, illustrating how speculative manias can devastate investor returns even when underlying technology thrives.
4. Implications for Alphabet Stock
Investors may reassess Alphabet’s valuation ahead of upcoming earnings, as concerns over AI infrastructure spending and balance-sheet strain could weigh on sentiment and share performance.