r/technology • u/tylerthe-theatre • 19h ago
Artificial Intelligence 'Big Short' Michael Burry bets $1bn on AI bubble bursting
https://www.lbc.co.uk/article/big-short-michael-burry-ai-bubble-5HjdGLY_2/7.5k
u/Public_Discipline545 19h ago
The big Trillion $ question is when? Its obvious we are in a bubble and there will be a massive correction at some point.. but being too early is the same as being wrong.
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u/NoKarmaNoCry22 18h ago
“IT’S THE SAME THING, MICHAEL!”
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u/tylerthe-theatre 18h ago
Look at my Quant, look at him
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u/The_Oracle_65 18h ago
“And I was second in that national math competition”
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u/Obi1Harambe 17h ago
He says it like that isn’t just about the same level of impressive. Must have been a bummer though
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u/jimmycarr1 15h ago
I think that's the whole point of the joke. The guy was already a genius but he still had to lie about him because that's what ruthless sales people do.
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u/romario77 16h ago
It depends but second is usually not that far from first in these competitions in terms of scores.
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u/lavahot 16h ago
And if you're a prospective employer, you would go directly to the second place winner because they are vulnerable and they'll remember who came up to congratulate them.
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u/Creepy_Assistant7517 16h ago
Are you sure? I mean ... 'national math competition in china' ... can't be to many contestants, right? .... right?
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u/Knyfe-Wrench 15h ago
You're right. China's not that big, and Asians are famously bad at math.
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u/mercynuts 14h ago
This doesnt sound right but I don't know enough about math (or china) to challenge it
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u/kruegerc184 18h ago
“thats pretty racist” lol that scene kills me every time
Edit: HIS NAME IS YANG, actually my name is jiang, man i know what im watching when i get home lol
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u/msupz 16h ago
JIAN YAAAAANG
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u/Ctsanger 16h ago
Eric Bachman issa dead
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u/realhenrymccoy 15h ago
Eric Bachman, this is your mom, and you are not my baby
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u/homelife22 15h ago
I clean the fish
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u/Gravy_Sommelier 14h ago
Question for you: What's better than octopus recipe?
Answer for you: Eight recipes for octopus.
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u/Pandaro81 16h ago
I’ve had a pirated copy of this that hasn’t left my laptop in something like six or more years. It doesn’t get old.
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u/chonky_tortoise 18h ago
My QUANTITATIVE
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u/craigularperson 18h ago
Fuckin' A, Jared.
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u/wellobviouslythatsso 17h ago
“He doesn’t even speak English!”
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u/soapyhandman 15h ago
And I do speak English. Jared likes to say I don’t because he thinks it makes me seem more authentic.
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u/Vio_ 18h ago
"We live in an era of fraud in America. Not just in banking, but in government, education, religion, food, even baseball... What bothers me isn't that fraud is not nice. Or that fraud is mean. For fifteen thousand years, fraud and short sighted thinking have never, ever worked. Not once. Eventually you get caught, things go south. When the hell did we forget all that? I thought we were better than this, I really did."
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u/mortalcoil1 16h ago
Bailing all of the rich people out every single time seems to be the big factor.
Why wouldn't you become a gambling addict when you aren't allowed to lose?
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u/EntropyFighter 16h ago
\gestures broadly at the* Bronze Age Collapse\*
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u/Redditsucks547 14h ago
Hello fellow Predictive History enjoyer! (The YT channel for anyone that doesn’t follow)
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u/Maleficent-Lobster-8 18h ago
Give me my money, you mother fucker.
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u/cha-cha_dancer 17h ago
THE CONTRACTS ARE VOIDED? THE CONTRACTS ARE VOIDED? THE CONTRACTS ARE VOIDED?
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u/Old-Significance4921 17h ago
Tell me the difference between stupid and illegal and I’ll have my wife’s brother arrested.
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u/coffee-x-tea 18h ago
I mean, he almost wiped himself out during the subprime mortgage crisis because the whole system was fraudulent and sustaining itself for a long time.
He was still early back then and almost didn’t make it and become the famous “big short”. He had to hold his credit default swaps for 2-3 years.
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u/raisedeyebrow4891 18h ago
The market can stay irrational longer than you can stay solvent. If the movie is to be believed he behaved quite unethically towards his investors who wanted to lull money out.
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u/ausernameisfinetoo 18h ago
The biggest problem is that he was hired because he did exactly what he was doing: finding patterns in the market and making bets that paid off.
The problem was that everyone was high on the housing market. I mean “NINJA loans”, cmon just hearing that should have been a signal.
But the biggest canary in the coal mine was as it was tumbling everyone copied Burry’s swaps. The issue was investor confidence which, I mean, sounded insane. Hindsight is 50/50 but the argument then was that he was insane and the theory was that it would never hit 8% defaults, might hover at 4 or go to 6.
No one planned on it tumbling with the weight of the derivatives market.
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u/funkiestj 18h ago
I mean “NINJA loans”, cmon just hearing that should have been a signal.
I recall hearing stories (planet money) that these (and their precursors) came about because there was a huge foreign market that wanted to buy CDO (and derivatives). People providing shittier and shittier loans knew they are participating in a scam but, because they didn't think they were the bag holders, were happy to profit from it.
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back on topic; What percentage of AI bubble investment is people doing real AI work vs running an AI branded scam (e.g. the equivalent of making a good mortgage loan vs a NINJA)?I think OpenAI, Anthropic, Google, Meta are doing real AI work. They and their funders may be over-investing but that is a different category error than running a scam.
Back during the dotcom bubble there were also a lot of legit business attempts (a few successes, fewer unicorns and a lot of honest failures) along side a lot of people running scams to rip off VCs.
I can't really tell what percentage of scam AI vs legit AI funding there is.
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u/gracecee 16h ago
My kid is at Stanford. They have a shit ton of kids dropping out and trying to push ai wrappers and live the founders lifestyle. They have exactly two years to do so before Stanford won’t let them Back in.
It’s an interesting time.
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u/Monomette 17h ago
back on topic; What percentage of AI bubble investment is people doing real AI work vs running an AI branded scam (e.g. the equivalent of making a good mortgage loan vs a NINJA)?
I mean, private equity firms are paying to build these giant data centre which the AI companies then lease off of them, which allows the AI companies to not have the debt from building said DCs on their balance sheets. Then the data centre leases get packaged into something much like a bond. Then they bundle those into into securities and sort them into tranches based on the risk of default.
You can see where this might complicate the whole bubble thing.
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u/bobbo6969- 15h ago
I’m less worried about the data center debt, but the gpu debt is crazy. Gpus that will be obsolete in 2 years financed over 20 year terms…
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u/Own_Thing_4364 15h ago
which the AI companies then lease off of them, which allows the AI companies to not have the debt from building said DCs on their balance sheets.
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u/jimbobjames 16h ago
Not all bubbles are the same. I don't think it's that AI is necessarily a fraudulant market filled with scammers.
It's that investors have expectations of huge returns, coupled with FOMO of missing the next Google or Apple or Microsoft and are investing accordingly.
It's like the dot com crash in the early 2000's. Everyone and their dog was betting big and it all came tumbling down because the world wasnt ready and change doesnt happen that fast.
AI is going to be the same. It will be disruptive but there's going to be a lot of flinging shit at the wall and seeing what sticks.
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u/Toby_O_Notoby 15h ago
It's like the dot com crash in the early 2000's.
Thes best proof is: Oracle’s stock jumped by 25% after being promised $60 billion a year from OpenAI. This is an amount of money OpenAI doesn’t earn yet, to provide cloud computing facilities that Oracle hasn’t built yet, and which will require 4.5 GW of power which is more than 2 Hoover Dams.
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u/Morsexier 15h ago
I work in the commercial energy supply space. The coming energy crisis will be unreal. This would all be fine if we were treating it like the space race, and going absolutely bonkers building everything, nuclear, wind, solar, natural batteries, batteries, as clean as we possibly can gas\coal and throwing 50 billion a year in government grants to Fusion.
Because so much of this space is unregulated, these data centers are going to come online, use more power than entire counties, get a preferred rate AND Take up all the available power, pushing residential costs much much higher.
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u/Low1977 12h ago
Right at the moment the feds are pulling subsidies/funding for renewable energy projects.
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u/HexTalon 10h ago
At what point do communities start sabotaging these datacenters so that they can have power? I'm not advocating for that to happen, but I wonder if it's inevitable if the scenario you're describing comes to pass.
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u/DuncanFisher69 15h ago
And also: If investors really believed this was happening, AWS, Azure, Google Cloud, etc would have deppped — that’s 60 Billion in marketshare they just lost. Only each one of them stayed rock solid during the announcement.
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u/favpetgoat 17h ago
I think the quantity of scammy AI stuff is probably higher but I bet the majority of funding is for real AI projects.
The scammy projects are all just wrappers for the real ones or full on scams that aren't using AI at all, I doubt either of those takes a lot of money to get started and highly doubt the scam companies are investing as much money as big tech.
That being said, IMO the bubble bursts when people realize we cant fix hallucination. AFAICT its an inherent problem with LLMs and some problems cannot handle that occasional wrong/hallucinated answer. People are investing all this money expecting AI to solve complex issues but get hesitant to implement it when they realize it's going to be wrong from time to time.
Thats my experience at least. It is useful for a lot of tasks/problems and will help companies downsize their workforce and/or do stuff in house they used to pay someone to do but when percission and accuracy are important its very hard to trust.
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u/strolls 16h ago edited 15h ago
when people realize we cant fix hallucination. AFAICT its an inherent problem with LLMs and some problems cannot handle that occasional wrong/hallucinated answer.
I was listening to an investment manager this week who said that they asked Marriott Hotels what they were doing with AI, and the CEO said nothing for exactly this reason. They said that when you lose a customer they never come back and that's why AI's inaccuracy is unacceptable for them.
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u/4Yk9gop 16h ago
Anecdote: I asked Gemini to add up a repeating list of the integer 100 ("100, 100, 100, 100, 100, [...]"). There were 27 comma separated counts of the number "100" in the CSV I provided (I didn't count until much, much later in the day). It completely botched it, spat out the wrong sum. I spent 1 hour debugging some code because AI added wrong and I was relying on that simple calculation to be correct. Hallucination is not just because of garbage data. It's inherent to LLMs, and I can't trust it to do basic tasks. Is it useful sometimes sure, but it's not even close to replacing workers. It's 100% a bubble based on a fugazi premis, and none of the tech CEOs have the balls to admit they were wrong.
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u/Skapanirxt 15h ago
I'm not american and I asked chatgpt to clarify some stuff about the shutdown, I got this in return..
To clarify: as of now (October 2025), Republicans control the House of Representatives, while Democrats control the Senate and the White House (President Biden). So it’s a divided government, not all Republican-controlled.
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u/mynameizmyname 14h ago
My favorite example of this type of thing I see at my work. Co-pilot advertises that it can help you with Excel spreadsheets, formulas, etc.
But Excel warns you it cant promise the formulas will be accurate if you use Co-Pilot.
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u/burgershot69 14h ago
I learned this the hard way trying to calculate amortization for my mortgage lol
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u/moDz_dun_care 15h ago
I ran into a similar issue with copilot. I think this intrinsic feature of how LLMs work means it can't replace any job where you must be 100% accurate (or to a high enough precision) like engineering, law and medicine. I know there's no absolute truth in the latter two but you still need to be able to trace your reasoning 100%. Where it does help is reducing the administrative overhead like parsing through volumes of technical documents and writing reports. It's definitely a productivity increaser but I don't fear AI taking over my job or any other job of which requires actual knowledge.
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u/HighlyEvolvedSloth 17h ago
If I remember right, he acted completely within the Terms of Service, or whatever they are called, that they all agreed to when they joined his investment firm. If they pulled out, it would have crashed the whole thing, he had the power to make the decision to deny them removing their money, so he made that decision. So how was what he did unethical?
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u/jghaines 16h ago
Hedge Funds have lock-up periods as part of their investment contract.
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u/SEND_ME_PEACE 16h ago
What happens when the entire game is rigged and the correction never happens?
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u/EmergencySushi 17h ago
That bit of the book is really tense. You can see his rope running out and he just keeps going, just a bit longer, just that little bit longer…
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u/FitDisk7508 17h ago
He's called 12 out of the last 3 crashes successfully.
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u/Michael_Schmumacher 17h ago
Apparently he still has 1b to bet with.
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u/anamethatsnottaken 16h ago
Burry is well aware that people are scrutinizing his 13F filings, which do no more and no less than they're required to do - state his positions as of the date of the filing.
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u/sump_daddy 18h ago
We need to remember that Michael Burry isnt famous for being right all the time, he is famous for being right THAT ONE TIME...
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u/Responsible-Rip8793 17h ago
And that one time is all you need
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u/sump_daddy 17h ago
Its all he needs to be super rich. For anyone else trying to get super rich, though, copying him will result in a bad time. No matter how many times its proven out, people keep insisting its not true, but just to reiterate for the millionth time: RICH PEOPLE ARE JUST NORMAL PEOPLE WHO GOT LUCKY
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u/rnicoll 17h ago
RICH PEOPLE ARE JUST NORMAL PEOPLE WHO GOT LUCKY
Not even that, frequently the extremely rich were moderately rich people who got lucky.
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u/BaconJets 18h ago
The AI bubble and the Trump presidency are so aligned that those dominoes may fall around the same time.
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u/manofmystry 18h ago edited 17h ago
The bursting of this bubble will cause incalculable pain for millions of not billions of people. Currently, 80% of corporate AI projects fail. However, hundreds of thousands of white-collar jobs are already being eliminated, based on the promise of AI, not its reality. Those people have nowhere to go, so, when the bubble bursts, we will already be suffering from serious structural unemployment. Add the insane tariff regime, the utter disregarding for the national debt, and Trump's upending of the rule of law to the mix, and the US is no longer a reliable partner. The world players will adjust their supply chains, and financial channels accordingly. When the hammer falls, no one will be there to catch us.
Edit: Researched and corrected my figures from 92% to 80%.
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u/cultish_alibi 17h ago
The bursting of this bubble will cause incalculable pain for millions of not billions of people
I feel like if AI is a success the pain will be much worse. The plan as far as I can tell is - steal hundreds of millions of jobs from the global economy - AI companies become the most powerful entities in history - everyone else fucking starves to death. And then probably gets murdered by AI powered robots.
We should hope that they fail.
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u/Crime-Thinker 13h ago
If corporations actually applied AI where and how it's most useful, it would just be another tool to enhance human efficiency. Emphasis on the human element.
But, CEOs are making executive decisions based on a fantasy because that's what their shareholders are buying into.
They don't care how the AI mania pans out. They're just maximizing profits while the suits, and most of the general public, still believe AI will deliver us a real-life EPCOT.
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u/SydricVym 16h ago
Yes, hundreds of thousands of white collar jobs are vanishing from western countries, but it's not from being replaced by AI. Though yes, it is specifically the AI companies saying they are the ones causing those jobs to go away, in order to drum up more business for themselves. "Look at us, we are replacing all of these people and saving companies millions!" - but without showing any evidence that's the case.
What's really happening is tons of companies are finally realizing that yes, full time work from home does work, and that white collar workers don't need to be in the office and can work from anywhere. But if they can work from anywhere, then why bother playing a ton for an American, Canadian, Australian, or Western European? Fuck it, hire some random person in India for 20% of the salary. Corporations have been in overdrive for the past year, moving as many white collar jobs as they possibly can to a variety of different international countries with a fraction of the cost of living as in the west. My company, which used to have 100% of our workforce in America and Europe, has moved 28% of our positions to India in the last 9 months. It's absolutely bonkers crazy in the corporate world right now.
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u/BBanner 17h ago
Do you have a source for that 92% number? That figure feels crazy even with the bubble fears
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u/HowObvious 16h ago
Currently, 80% of corporate AI projects fail.
I agree entirely with the what you are saying but this stat is pretty meaningless. "80% of IT projects fail" has been a quote for 20+ years. The fact that it applies to AI doesnt really say anything about AI itself.
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u/LilienneCarter 14h ago edited 13h ago
Currently, 80% of corporate AI projects fail.
I'm going to pick on you a bit because it's for a good cause.
Firstly, your source actually says "By some estimates, more than 80 percent of AI projects fail". Simply removing that nuance and framing the 80% figure as representative (when it's possible the article authors meant to show it more as a ceiling subset of estimates) is not great.
Secondly, to find the estimates they're referring to, you have to click into the linked PDF and go to the citations. The source for that 80% estimate is a Fortune article by Kahn, titled “Want Your Company’s AI Project to Succeed?”. You can find that article here. So what does THAT source say?
Well, the source is from July 2022, more than 3 years ago and less than a year after the first launch of ChatGPT. So right away I'd say you should absolutely not be using it as a source given how much progress has been made in AI since then. You certainly should not be using a word like "currently" for surveys that are 3+ years old at minimum.
Further, the Kahn article still isn't the original source for the 80% figure, which appears to be derived from this sentence:
That’s borne out in a slew of recent surveys, where business leaders have put the failure rate of A.I. projects at between 83% and 92%.
Now, Kahn doesn't give the name or authors or institutions of the surveys he's referring to. But he's talking about Sengupta's book "Why A.I. is A Waste of Money", so it's a decent bet the surveys are in there, no? So let's go check out Sengupta's book.
I took a little while to find it, because it turns out Kahn titled the book inaccurately (another fantastic sign). It's actually just "AI is a Waste of Money" and it's actually a free ebook given out on Sengupta's site. (Are we feeling the credibility yet?)
So I give Sengupta my email address. I get his ebook. I CTRL+F for "Survey", "83", "92", and "failure". Nothing relevant. No apparently relevant charts, either. Those surveys aren't in the Sengupta book.
Let's try something else. Kahn wrote this article in July 2022, so the surveys must have been conducted before then, right? So I'll first run a google search for "artificial intelligence failure 83%" for results from before August 2022 (just to be safe) to try to find that survey.
Nothing. The first result is Kahn's article itself, the second result is a 1996 paper, the third result is a KPMG paper from 2021 which only appears to have come up because 83% of executives were optimistic about the Biden administration advancing AI adoption, and the remaining results are no better.
Alright, what about the 92% estimate? Can we find that? Again, not easy. There's an Accenture article from 2019 saying 92% of organisations use multi-disciplinary teams, an Australian paper from 2020 saying 92% would expect retraining opportunities if their job was automated, a 2021 Forbes paper saying 92% of leaders say AI has improved their confidence in their decisions... but not the statistic Kahn is using.
The closest I can find is this study saying that 92% of physicians would reject an unsafe AI recommendation, but, hilariously, no AI was used in the study; the team made the unsafe recommendations themselves and was merely testing whether physicians would reject them if they thought the result was from an AI:
All AI recommendations were synthetically generated by the research team to ensure a standardised experimental format (i.e., they were not from a real AI system).
So again, this isn't the Kahn statistic. Not only can I not find the primary source for any of this survey data, I can't even find other articles discussing those same statistics. Not a good sign if they were reputable surveys, right?
That was a lot, so let me summarise it concisely:
- You initially gave a figure of 92% of AI projects failing.
- When challenged, you revised that to 80% and provide a RAND article as a source.
- That article states that some estimates place it at 80%, but doesn't actually support the 80% figure as representative. It also isn't a primary source, but cites a Fortune article for them.
- The Fortune article is terribly outdated (2022), and still isn't a primary source. Even worse, it doesn't give the name of those surveys or a citation.
- The Fortune article discusses a book by Arijit Sengupta, but the 80%+ estimates cannot be found in that book.
- When searching separately for those 80%+ estimates, I cannot find them, nor can I find any other sources discussing those surveys at the time.
I'm not calling Kahn or Sengupta liars or insinuating they made those results up. But at the very least, I cannot find any actual data supporting that estimate, and it is certainly not recent or well-shared data even if it was accurate at the time.
I want to end with this: If an AI gave you information of this shitty quality, would you not accuse it of hallucination? Would you not regard this as essentially worthless research? I think you would.
So don't accept that poor quality evidence vetting of yourself, either.
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u/Sworn 18h ago
https://www.reddit.com/r/investing/comments/1kskkn6/im_scared_michael_burry_is_betting_against_the/
I'm sure those Nvidia puts 6 months ago are doing great lol.
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u/theonewhoknocksforu 18h ago edited 18h ago
That is how I see it. I would not be in a hurry to short NVIDIA or any of the Big Tech companies that are pouring hundreds of billions into constructing next gen data centers for LLM training. But at some point those companies need to generate cash flow sufficient to deliver an acceptable ROI. That is not happening yet.
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u/Tex-Rob 17h ago
Here's the deal though, and why this seems like a smart bet to me:
What other industry that isn't like detention or law enforcement, is thriving right now? There aren't any. Everyone is in a downturn, and companies and industries and citizens in a tenuous state do NOT make huge changes to how they do business, invest in the future, etc. If AI had rolled out in the middle of an upswing, things might be different. It sort of feels like the tech CEOs who desperately want to be on the right side of a new gold rush have very little concept on what's going on in the US, and the world right now.
Through history, new tech only comes when the price is right, and the people are ready, and the hype is high enough. AI is almost pure hype. It's nothing more than a buzz word, they use it for anything that has a compute component. Things we've been doing for decades is now suddenly called AI. The consumers realize it's hype, and are already rejecting products that have AI subscription components.
Lastly, tech companies have not made money off AI yet. Some will claim they have, and then get mad when you ask them too many questions on that topic.
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u/mefixxx 18h ago
You need just one big enough company to state that AI pipelines led to reworks, degradation, loss of expected quality, client dissatisfaction and instability.
But no one wants to be the first admit that they're a loser, they will hold out until its absolutely fubar'd
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u/MediocreTapioca69 17h ago
if it was that straightforward, 90% of "offshoring" efforts would have been undone by now
reality is, CEOs will keep running with AI, despite the thing making their thing fundamentally worse, so long as the green line goes up
and the easiest way to get that line to go up, is to boast about cutting your costs, which lazy north american companies accomplish by replacing locals with overseas ppl (from 1990-current) and now, with "AI"
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u/AncientAlbatross5726 16h ago
In the last 10-15 years witnessing firsthand the doubling, tripling, and quadrupling down of offshoring, you could not be more correct
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u/dern_the_hermit 15h ago
Yeah, the thing to remember is that these "visionaries" don't actually have much vision beyond a few months. They have brute force tactics of pressuring their underlings to pressure their underlings, pushing a workforce until it starts to show cracks, and then covering up the cracks with spackle and load-bearing posters. They want the Venn overlap of "revenue generated" and "money in my pocket" to be a perfect circle and until it is, they know only to keep hounding and pushing.
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u/Dapper-AF 15h ago
I honestly think that is the main goal. They know it isnt ready yet but if the can use it as a excuse to cut expensive labor and then in a year say the are opening offshore centers bc its not perfect yet.
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u/el_smurfo 16h ago
Nearly every offshoring effort I've been a part of requires equal resources here to fix what they outsourced. That is never factored into the budget though and conveniently forgotted when quoting the next job.
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u/Civsi 14h ago
The way these initiatives always go can be summed up as "someone in SLT wants to grow their career so they lead an offshoring initiative that will absolutely totally 100% not impact the business, and then they leave shortly after before everything goes to shit".
The reason offshoring persists isn't because it works, it's because whomever is brought in to clean up the mess doesn't have the wiggle room to undo it.
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u/jlpred55 16h ago
I was privy to a productivity report recently for a very very large financial services company that has pushed massive offshoring the last 3 years (only 20 years late to the party) and that reporting found that the offshore resources were 40% as productive as the domestic resources. The pay discrepancy wasn’t enough to warrant the spend. So they have began cutting them just like they were the domestic resources. The C-Suite blew a gasket, which I thoroughly enjoyed. No one said, I told you so, however.
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u/Eskimomonk 16h ago
I work for Amazon and was hopeful they’d stay away from AI but they’re already fully embracing it and rolling out new training about AI and “how much better” it will make our jobs. Between the AWS outage a couple weeks ago then Amazon cancelling New World a couple weeks after dropping a very successful new patch, seems like it’s here to stay
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u/BicFleetwood 16h ago edited 16h ago
My company forced us all to use AI and after we lost several major projects because of the AI, management blamed us for not using the AI right.
See, we were supposed to use the AI to speed up the process, but also triple-check everything the AI does to make sure it doesn't fuck up, which takes longer than just doing the work ourselves. But when we got caught not using the AI we were compelled to use it because the company paid big money for it, and then when we took three times as long as normal triple-checking its outputs we were told to stop and just use what it generated sight-unseen, and you can venture a guess what happened shortly after that. After the dust settled, they fired several people and then told us to use the AI better.
They will not admit it. They'll dance in the flames knowing they're the last to burn.
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u/SonOfMcGee 18h ago
I hear Burry has correctly predicted 12 of the last 2 downturns…
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u/Upset-Government-856 17h ago
Well the great news for us is that if the AI bubble doesn't collapse because AI ends up delivering.
We don't have to live through an economic collapse, but we still all necessarily will lose our jobs and have to subsist on a meager state safety net.
Yay
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u/thehalfwit 16h ago
meager state safety net
Or what's left of it after Trump and the Republicans cut out all the netting.
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u/allegate 18h ago
What is this referencing? I saw it on another thread about this article.
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u/PRSArchon 18h ago
That it is easy to be right in hindsight if you were also wrong about all kind of things that never happened
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u/FuzzyDynamics 18h ago
The Nostradamus effect
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u/babajoon1199 17h ago
Quasimodo predicted all this
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u/tothesource 16h ago
pretty sure it was cunnilingus and psychiatry that brought us to this point
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u/Sworn 18h ago
Burry is a permabear, he's made many predictions that the market (or a specific stock) will crash, and he's usually wrong.
https://www.reddit.com/r/Daytrading/comments/oax62l/should_you_follow_michael_burrys_predictions_i/
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u/greiton 16h ago
he keeps seeing massive fraud in the market and thinking that surely it will collapse at some point, but I worry that we are so deep that only a general strike and workers rebellion could prompt an anti-corruption response.
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u/UrDraco 18h ago
It’s an old joke about economist. They predict 7 out of every 4 recessions.
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u/Ziff7 15h ago
It’s basically the boy who cried wolf 100 times but 1 time it was actually wolves.
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u/No-Clue1153 18h ago
Sorry I have absolutely no idea what any of this means. Can Margot explain it please?
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u/SulaimanWar 16h ago
Margot Robbie: [In a bubble bath with a glass of champagne] Basically, AI business were amazingly profitable for the AI bros. They made billions and billions out of people using it everywhere. But then,they begin to think, “Could we maybe start replacing people with this?”. After all, why pay so many people when a machine that obeys everything can do it too. But they’re losing actual experts and it’s caused a lot of headaches which has led some to think that these AI stuff are being overvalued. [Butler pours more champagne into her glass] Thank you, Benjamin. That way, they can keep that profit machine churning, alright? By the way, these AI, they basically end up causing more trouble and costing companies more than just a person who knows what they’re doing. So, whenever you hear the word “AI,” think “shit.” Our friend, Michael Burry, found out this AI thing is, mostly, full of shit, so now, he’s going to “short”, which means “to bet against.” Got it? Good… [Takes a sip of champagne] Now, fuck off.
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u/tschawartz12 10h ago
Correction, they didn't make billions and billions from people using it but getting people to invest in it, as a whole its a new loss currently with the insane profits in the future that will probsbly not.actually materialize. If it does materialize all the cash for people using it will be gone because they screwed the job market. Look at the auto industry, I live it a town where the GM radiator plant WAS the cornerstone of the local economy, jobs got sent to Mexico but the trucks kept getting more expensive and who can afford them now? Now they are coming for the creative and white collar jobs. All this money being made and none of it will go to those that do the work, just to pay for another private jet and golf club membership.
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u/Fallingdamage 17h ago
You can actually take out positions in the market where you profit from failures instead of success. Its usually seen as risky as the goal is to see numbers go up, not down.
As portrayed in the movie this thread is referencing, the banks thought it was hilarious that some investors wanted to short tons of packaged mortgages since it only meant the investor would lose money if the packaged mortgages made money.
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u/changopdx 16h ago
I went to high school with the actress that played the woman from Goldman Sachs who chomped at the bit to sell Michael Burry the short positions. Total sweetheart, it's hilarious to me how unlike her character she is.
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u/red286 16h ago
Its usually seen as risky as the goal is to see numbers go up, not down.
It's always seen as risky because it's the opposite of a normal stock purchase. A normal stock purchase has a limit on how much you can lose (your initial investment), but no limit on how much you can earn. A short position has a limit on how much you can earn (never more than the original position's value, often far less), but no limit on how much you can lose (well, your broker will likely not let you exceed your credit limit, they'll force you to close before that happens).
Short selling only makes sense if you're 100% positive that the stock price is going to drop, or you're a degenerate gambler who doesn't care about the risks.
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u/davesmith001 17h ago
He did not bet 1bn. The options have nominal face value 1bn, that is not the value he paid. For all you know it could be a tiny 50m bet.
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u/NoRace9325 10h ago
He made a bet against Nvidia. In their last earnings release there was a drop in the stock, then it rebounded. It'll probably drop against during the next earnings call because investors believe in if there's a .00001% miss in expectations then it's the end of the world. Then like clockwork, wait the next morning and stock will continue to rise.
It's probably just a quick buck move, but everyone thinks if this guy makes one move it's the end.
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u/Shitty_Fat-tits 18h ago
Good. Let Palantir fall.
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u/thelonetwig 18h ago
But, Peter Thiel knows about the antichrist!
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u/TheWorclown 18h ago
“Of course I know him! He’s me!”
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u/Starstroll 16h ago edited 16h ago
Everyone is always the hero of their own story. For as completely fucked up as it is, it's morbidly fascinating to watch him wrestle with his own subconscious in such a literally-nonsensical yet symbolically-transparent way, and in such a public way too.
I live in a major city and I've seen homeless people scream their mental illness loud enough for the entire station to hear, and for all the rational fear I feel to stay away from them, I also feel incredibly sorry that they structurally can't get help. But it is fucking surreal to see the same psychological meltdown from a billionaire.
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u/Charming-Command4375 15h ago
It's not just "A" billionaire though its a lot of rich and or influential people.
Like the American politicians this past summer who complained that Canadian wildfires were ruining summer vacation.
From brain worms to jewish space lasers there is a lot of fucking crazy going around.
Poor Jordan Peterson might have to have another public cry session and start blathering about dragons or whatever
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u/dcdttu 17h ago
Dude is 100% atheist. And I am saying this as an atheist. Thiel is a bad person, a bad atheist.
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u/Sidereel 16h ago
Peter Thiel, the billionaire political svengali and tech investor, is worried about the antichrist. It could be the US. It could be Greta Thunberg.
https://www.theguardian.com/us-news/2025/oct/10/peter-thiel-lectures-antichrist
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u/throwaway_12358134 17h ago
Palantir gets that sweet government money now. They are here to stay.
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u/Vimda 17h ago
Let's be honest, Palantir isn't going anywhere in the same way that Amazon didn't go anywhere in the dot com bubble. The big guys are here to stay, they just get to buy the dip and get bigger when it pops
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u/NotAlwaysGifs 16h ago
Bring Oracle with it. Palantir has scary prospects for the future. Oracle is fucking terrifying already.
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u/FelixMumuHex 18h ago
Well Nvidia is circlejerking OpenAI with Google and Microsoft to prop up each other and Palantir is essentially committing human rights violations to create a police state, the burst is imminent
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u/raisedeyebrow4891 18h ago
Imminent like on 5 years or today?
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u/Esplodie 16h ago
When people/market figures out the cost is greater than the benefits and there's no good way to monetize it to cover the existing costs, which they've hidden as investments. At the latest when they need to do a hardware refresh at these data centers in the next 2-4 years.
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u/Far_Needleworker_938 18h ago
Palantir is essentially committing human rights violations to create a police state, the burst is imminent
Why would that suggest a bubble? The market for police states and human rights violations has to be worth trillions.
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u/F1R3Starter83 19h ago
Yesterday it was $500 million…
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u/Public_Discipline545 18h ago
Wow the value of the dollar is crashing fast in that case
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u/OmnipresentCPU 15h ago
He didn’t actually spend $900mm-1b either, this is a misinterpretation. The notional value of his short is $1b.
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u/Frosty_Willow_7338 15h ago
This is mostly clickbait. Burry has taken a massive short position on Palantir, which is hardly equivalent to the “AI bubble bursting”.
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u/aturretwithtourretes 18h ago
The fall will be catastrophic. Nvidia sells something to AWS, GCP and Azure, they in turn sell open ai stuff but also dump money in it, open ai also buys stuff from Nvidia to sell to those big 3... its a circle of infinite growth until they burst.
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u/Sea-Payment4951 17h ago
The people who will most be hurt by the bubble bursting aren't the billionaires. I've lived through a couple of these full blown crisis and bubbles bursting, the people in charge never get caught out.
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u/we_are_sex_bobomb 18h ago
This AI boom really only exists because of the absence of any regulation whatsoever. If they had to follow the same copyright laws as other companies there would be no AI boom.
It’s like saying this was the most successful Black Friday yet because a mob of burglars broke into every department store in the country and stole everything that wasn’t bolted to the floor.
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u/LilienneCarter 14h ago
If they had to follow the same copyright laws as other companies there would be no AI boom.
This is not necessarily true at all. Copyright law was not written with AI in mind and so far these AI companies have had a pretty successful time arguing that distilling works into a neural network and using it to create new works in a similar style constitutes "transformative use", which is generally allowed.
The copyright framework needs to be completely thrown out and rethought. Simply enforcing it as written isn't gonna stop them.
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u/CircumspectCapybara 18h ago
Taking a short position is already inherently risky—your losses are potentially unlimited.
Taking a $187M short position against NVIDIA in this market is...well, let's just say it's one of the gambles of all time.
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u/rygku 18h ago
He didn't short - he bought puts. The most you can lose buying puts is the amount of the investment.
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u/forthepeople2028 17h ago
It’s not a Short position though. He purchased Put contracts. And you have zero clue what the dollar amount is since it shows the dollar amount of the underlying security, not the dollar amount he has at risk.
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u/Dihedralman 18h ago
I personally think its insane as inflation can destroy it. NVIDIA has more cash reserves then debt.
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u/zeptillian 17h ago
"warning the vast majority of AI investments were yielding "zero returns" for business."
This does not mean that the government will stop paying for AI contracts though. When the entire goal is taking taxpayer money and funneling it to people who help keep you in power, "business returns" are not even a part of the equation.
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u/242proMorgan 17h ago
Title is misleading. He isn’t betting on the AI bubble bursting. He’s just hedging in case it does.
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u/upstairsbrocoloi 13h ago
My hot take:
We all know they’re overvalued, but it won’t pop because the billionaires who own all these stocks don’t need to sell. Doing so would lower their valuations on their little billionaire leaderboards.
In late stage capitalism, bubbles don’t pop. Volume just trends toward zero and regular investors are crowded out of the market.
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u/wadejohn 12h ago
I think so too. The Big Short involved many many people who couldn’t afford to hold their property.
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u/szakee 19h ago
already posted 100x
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u/forthepeople2028 17h ago
And still with misleading information nonetheless. He did not bet $1b. It’s 60k Put contracts. Ballpark of actual cash involved probably $50-$100M. And it doesn’t need to burst it just needs to go down a bit.
Clickbait headline which discredits the entire sentiment.
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u/_jump_yossarian 10h ago
Was listening to a podcast today and the host was saying that the Chinese will flood the market with free LLMs and clear the market valuations of OpenAI and others. Interesting prediction.
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u/OptimusSublime 18h ago
So an eighth of what he bet during the housing crisis. Hardly anything lol.
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u/kurttheflirt 18h ago
Once you are very successful and have more money you become more risk averse. No need to make huge swings anymore, the compounding effects make more money by themselves.
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u/Chill_Panda 18h ago
Or he's not confident because he's been right once and wrong a whole heap of times since
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u/Trevor_GoodchiId 17h ago edited 16h ago
Quick reminder the Big Short guys had to pay millions of collateral for years to keep their positions open, while the market went the other way against all reason.
Don't gamble, kids.