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Published On: Sat, Dec 6th, 2025

Michael Burry: Nvidia Is Like Cisco In 2000, We’re Near The Level Of When The NASDAQ Peaked In The Dot-Com Bubble

Former hedge fund manager Michael Burry, best known from “The Big Short,” discussed his bearish outlook on the stock market in an interview on the podcast “Against the Rules with Michael Lewis.” Burry correctly predicted the real estate bubble that led to the 2007-2008 subprime mortgage crisis.

MICHAEL BURRY: Let me put it this way. There are, I think 5 billionaires that came out of Palantir because they own Palantir stock and the revenue was 4 billion or less, basically 4 billion. So the billionaires to revenue ratio was greater than one. And I’ve never seen that before. MICHAEL LEWIS: It was that what attracted your attention in the first place? BURRY: Well, it, that was a, that’s a cute little. [LAUGHTER] I was like, wow, there’s, how did they get 5 billionaires out of that group? Um, and so out of a company that has 4 billion in revenue and actually, uh, stock-based compensation, basically it outweighs almost all their income. They have to pay their people who are doing all this consulting so much in stock that they just use stock-based compensation. And then what they do is they buy that back. And the company would like you to just give them credit for — what Wall Street generally does is they take the earnings per share and then they add back the stock-based compensation because it’s non-cash and they add it back to the earnings. And I think actually the way GAAP accounts for stock-based compensation is skews low versus what it actually costs. The real cost, you can look at how much are companies buying back to offset that dilution? And you can just take that amount and deduct it from cash flow. And so if you do that with Palantir historically, they don’t make anything. So I basically looked at the company and said, and you’re worth this much. And you really don’t make anything if it’s tiny, a little bit of revenue and you have all these billionaires. LEWIS: You had an argument back in 2008 for when the subprime mortgage bond market was going to start to unravel when people are going to start to default. Do you have a timing argument for now with, with Palantir? BURRY: Well, I think this is the, this is the AI, the AI consulting thing. So Palantir and NVIDIA are the two luckiest companies on the planet. Neither produced a product for AI. LEWIS: No, I know, BURRY: But they’re the two poster children for AI. LEWIS: Yes. NVIDIA was a good computer graphics chip company. BURRY: NVIDIA was a computer graphics chip. I actually knew the CFO. We talked in 2015 or 16, I went long the stock and I, and I can say, hey, you’re doing a great job. I love how you’re buying back stock. Her kids was on my kids’ basketball team. I think I bought the stock like a year or two later, the stock was up to like, it went from 20 to 90 at the time, which is like 40 cents now, but after the splits, NVIDIA was lucky, they got lucky once with the crypto mining because crypto mining needed GPU — GPUs were the, they weren’t custom for GPU, for crypto mining, they were just the thing that was there that could be used. And then AI came along and it’s the same deal. About a year and a half ago, a year and a half to two years ago, Palantir was not an AI company. Basically when ChatGPT came out, they basically put an AI cover on their applications that were, they were selling and then selling all this consulting on and they call it AI, but that’s what every company is doing now. LEWIS: But is there a timing argument for AI then? BURRY: Yeah. So this gets to, what does this bubble look like? This bubble looks an awful lot like the dot-com bubble, which is not really a dot-com bubble. It was a data transmission bubble. It was a huge build out of fiber and a huge fiber needed routers and routers needed fiber and it just blew up. So the market peak was in March 10th of 2000. Cisco grew 55% that year revenues in 2000 and it grew 17% in 2001. Because the investment continued, it actually peaked for about a year after the top in the market. And so what you can do is you can look at a net investment, which is capital expenditures, less depreciation over time, and you can put it against GDP to kind of a nominal GDP to compare it across eras and you get these nice mounds of investment manias. And what you see in every prior one was the relevant stock market peak was before you were even halfway done with the capital expenditure. In the majority of cases, the capital expenditure hadn’t even peaked yet. And so right now we’re ramping up for capital expenditure and what’s happened is we’ve gotten into this part of the phase where if you announce a dollar of CapEx on AI, your market capital go up $ 3 for every dollar you add. Oracle, we saw that with Oracle, giant company was up 40%, like incredible. Larry Ellison was briefly the richest man because they announced this massive multi-hundred billions of dollars of basically spending that they would have to, well, they announced bookings, but they would have to spend. They’re still building it out. LEWIS: Where are we then? BURRY: I can’t say because it hasn’t happened fully yet. We are at levels of prior peaks. We’re at the level of the shale revolution relative to GP. We’re at the level, near the level of the dot-com, when the dot-com, the NASDAQ peaked. LEWIS: So you felt two-year puts were enough? BURRY: I thought two years would be enough, yes. I think two years would be enough. I think if you’re going to buy something now, buy healthcare stocks, they’re really out of favor. If you own something that has been gone up a lot, you’ve done really, really well in it, it’s on a — it’s shooting straight up and you know it’s, think it’s kind of overvalued, you should, I think that’s something you should sell.


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