Warren Buffett and Michael Burry Don’t See Eye to Eye on AI

One is the Oracle of Omaha. The other pulled off the Big Short. Warren Buffett and Michael Burry are two of the biggest names in American investing, but they can’t seem to agree on one of the biggest investment questions of the 21st century: Is artificial intelligence an overinflated bubble set to pop, or is all the investor hype actually warranted? Buffett last month revealed a major new stake in Google parent company Alphabet, making the tech giant one of Berkshire Hathaway’s top 10 largest holdings. The investment is being interpreted as a bet on AI, which Alphabet is invested heavily in; markets are now treating the company like the front-runner of the AI race. Burry—famous for making a bet against the American housing market that would prove very lucrative during the 2008 financial crisis—recently took two more short positions, this time on the automation and data company Palantir and chip-maker Nvidia, both darlings of the AI boom. Burry has been particularly critical of accounting policies used by Nvidia’s Big Tech customer base, which he says “have been systematically increasing the useful lives of chips and servers, for depreciation purposes, as they invest hundreds of billions of dollars in graphics chips with accelerating planned obsolescence.” Their diverging investment strategies come as chatter of an AI bubble has entered the mainstream—even OpenAI CEO Sam Altman is voicing concerns—while, nevertheless, investors continue to pump money into the sector. Both Buffett and Burry have quite a bit of credibility, making their contradictory tactics all the more notable. The former is responsible for making Berkshire Hathaway one of the most recognizable names in American investing, with what was once a Nebraska textile company now a massive conglomerate with tendrils across the U.S. economy. The latter inspired the Michael Lewis book The Big Short and the movie of the same name, in which he was portrayed by Christian Bale. Each is also going through a period of major transition. Buffett announced in May his plans to step down as CEO at the end of this year (though he will hold onto his stock). Vice chairman Greg Abel is set to replace him. Meanwhile, Burry’s hedge fund Scion Asset Management will close by the end of this year, with Burry writing in a recent investor letter that his “estimation of value in securities is not now, and has not been for some time, in sync with the markets.” He’s since launched a financial newsletter called Cassandra Unchained on which he’s expressed further skepticism of the AI boom. BY BRIAN CONTRERAS @_B_CONTRERAS_