Michael Burry Flags Meta’s AI Costs, Warns Nvidia Could Mirror RCA’s 98% Collapse
Michael Burry compared today's AI surge led by Nvidia to 1920s RCA mania, whose shares plunged 98% peak-to-trough despite long-term industry growth. He singled out Meta Platforms among tech giants for potential cash-flow strain, warning that AI data-center buildout costs and increased borrowing may erode profits.
1. Burry Draws RCA Parallel
Michael Burry likened the current AI frenzy led by Nvidia to the 1920s radio mania centered on Radio Corporation of America, noting RCA’s 1929–1932 plunge of approximately 98% peak-to-trough despite continued radio growth over decades.
2. Critique of Meta’s AI Spending
Burry warned that massive investments in AI data-center buildouts are draining cash flow at major tech firms, specifically highlighting Meta Platforms alongside Microsoft, Alphabet and Amazon for increased borrowing and potential profit erosion.
3. Market Reaction and Outlook
Meta Platforms shares fell 2.8% in response to the warning, with investors questioning whether sustained AI infrastructure spending will pay dividends or risk a downturn similar to historical tech bubbles.