Gavin Baker Welcomes Michael Burry’s Bearish AI Warnings

Burry, known for predicting the 2008 housing collapse, has used his Substack to warn that aggressive capital spending on AI infrastructure—specifically Nvidia chips and data centers—could lead to a bubble if demand fails to materialize. Baker, speaking on the "Generating Alpha" podcast, insists that this bearish pressure serves as a reality check for investors caught in the hype cycle.

Drawing parallels to the history of canals, railroads, and the internet, Baker acknowledged that transformative technology often invites speculative excess. However, he remains unconvinced that the current market is in a bubble. He points to valuation multiples that remain consistent with levels seen five or six years ago, noting that the trauma of the dot-com era continues to force a level of discipline among tech leaders. According to Baker, physical constraints such as electricity supply and microchip production capacity, combined with the lingering "scars" of past market crashes, act as a natural brake on irrational exuberance.