TLDR
- Michael Burry predicts OpenAI will fail like Netscape, the 1990s browser that became a dot-com bubble casualty
- The Big Short investor says OpenAI is losing cash rapidly and compares Palantir to failed consulting firm DiamondCluster
- Google’s Gemini AI now outperforms ChatGPT on critical tests, prompting internal crisis at OpenAI
- Burry claims Microsoft props up OpenAI while extracting its technology without putting it on balance sheets
- He maintains short positions on AI companies including Nvidia and stands by his 2021 inflation warnings
Michael Burry released new predictions about artificial intelligence companies through social media posts this weekend. The famous investor compared OpenAI to Netscape and called Palantir similar to DiamondCluster, both failed dot-com era businesses.
Burry described OpenAI as “doomed and hemorrhaging cash” in his X posts on Friday. He referenced Netscape, the web browser that dominated the internet in the 1990s before becoming a cautionary tale. Netscape was among the most valuable internet companies before it collapsed during the dot-com crash.
The investor stated that Microsoft keeps OpenAI operating while taking its intellectual property. Burry wrote that Microsoft maintains OpenAI separate from its financial statements. He claimed the AI sector requires OpenAI to launch a $500 billion IPO, though raising even $60 billion “would not be near enough” to meet cash needs.
Competition From Google Intensifies
OpenAI faces increased pressure from Google’s AI products. The Wall Street Journal reported Sam Altman, OpenAI’s CEO, described the situation as “code red” to employees. Google advanced from trailing in AI development to becoming a serious threat over the past month.
The Verge stated that Google’s Gemini 3 now outscores OpenAI on important language and reasoning evaluations. This flips the previous dynamic where GPT-4 led the industry. OpenAI halted side projects and reassigned teams to keep ChatGPT competitive against Gemini’s growth.
Google has captured more users, achieved better benchmark results, and built momentum in recent weeks. The company shifted from an AI laggard to a formidable challenger. Sources say OpenAI is restructuring its workforce in response to Google’s advances.
Burry Draws Parallels to Dot-Com Failures
Burry compared Palantir to DiamondCluster in his weekend commentary. DiamondCluster was a dot-com consulting company that experienced rapid growth before being acquired. The comparison indicates Burry identifies similar warning signs in Palantir’s current business model.
The investor used his posts to defend previous market predictions. He shared articles about his warnings on meme stocks and inflation from 2021. The following year brought a substantial market correction and inflation peaked around 9 percent in America.
Burry led Scion Capital during the 2000s and gained recognition for betting against subprime mortgages. His trade generated $100 million for himself and $700 million for his clients. The story inspired “The Big Short” book and film, where Christian Bale portrayed the investor.
He recently closed his SEC-registered fund at $155 million in assets. Burry now concentrates on market analysis through social media and a Substack publication. His portfolio previously included short positions on Nvidia, which he disclosed last month.
Burry requested his followers share proof of Nvidia graphics processing units stored in warehouses. He noted that several people had already contacted him with details. The investor said the information was “getting interesting” and he wanted more evidence.
He responded to critics who questioned his bearish predictions from previous years. Burry argued that no short seller keeps positions open for five or ten years. He said evaluating old calls without proper timeframe context misrepresents trading practices.
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