Michael Burry Warns Microsoft’s AI Data Center Capex Risks After 98% RCA Collapse
Michael Burry warned that Microsoft's aggressive AI data center spending is consuming cash flow and increasing borrowings, questioning when capital expenditures will end. Burry likened the AI surge to 1920s RCA mania—where RCA plummeted 98% peak to trough despite long-term radio growth—suggesting infrastructure investments risk a sharp reversal.
1. Burry Questions Microsoft AI Spending
Michael Burry highlighted that Microsoft’s substantial AI data center investments are consuming cash flow and increasing debt, asking “When does the spending for AI data center buildout actually end?” He warned that aggressive capital expenditures could pressure balance sheets and earnings.
2. RCA Mania Parallel and Risks
Burry drew a parallel between the current AI surge and 1920s Radio Corporation of America mania, noting RCA shares plunged 98% peak to trough despite long-term industry growth. He suggested that even accurate long-term forecasts couldn’t prevent a steep stock collapse, implying similar risks for AI-focused stocks.