OpenAI Headed for Netscape-Style Crash, Says Big Short Investor

TLDR

• Michael Burry compared OpenAI to Netscape, predicting it will fail despite potential $500 billion IPO plans
• He likened Palantir to DiamondCluster, a dot-com consulting firm that eventually got acquired after losing momentum
• Burry claims Microsoft is keeping OpenAI alive while extracting its intellectual property and keeping it off balance sheet
• Google’s Gemini has overtaken ChatGPT in key benchmarks, with OpenAI CEO Sam Altman calling it a “code red” situation
• Burry maintains short positions on AI stocks including Nvidia and defends his past bearish market predictions from 2021-2023

Michael Burry posted new warnings about artificial intelligence companies on X over the weekend. The investor, famous for predicting the 2008 financial crisis, compared OpenAI to Netscape and Palantir to DiamondCluster.

Burry said OpenAI is “doomed and hemorrhaging cash” in his latest social media posts. He made the comparison to Netscape, the 1990s web browser that became a symbol of dot-com era failures. The company was once the world’s most valuable internet business before collapsing.

According to Burry, Microsoft is keeping OpenAI functioning while extracting its technology. He claims the company stays off Microsoft’s balance sheet. Burry wrote that the AI industry needs a $500 billion IPO from OpenAI, but even raising $60 billion “would not be near enough” to cover its expenses.

The timing of Burry’s comments comes as OpenAI faces pressure from Google. The Wall Street Journal reported that OpenAI CEO Sam Altman called Google’s progress a “code red” situation. Google has moved from being behind in AI to becoming a major competitor in recent weeks.

Google Gains Ground on OpenAI

The Verge reported that Google’s Gemini 3 is now beating OpenAI on important language and reasoning tests. This reverses the previous situation where GPT-4 led the industry. OpenAI has stopped working on side projects to focus teams on keeping ChatGPT competitive against Gemini.

Google has gained users, improved benchmark scores, and built momentum over the past month. The company transformed from an AI follower to a serious threat. Reports indicate OpenAI is reorganizing its teams in response.

Burry also compared Palantir to DiamondCluster in his posts. DiamondCluster was a dot-com era consulting company that rose quickly before being acquired. The comparison suggests Burry sees similar patterns in Palantir’s current trajectory.

Burry Defends Past Predictions

The investor defended his previous market calls in multiple posts on Sunday. He pointed to news articles about his warnings on meme stocks and inflation in 2021. That year came before a major market correction and inflation peaked near 9 percent in the United States.

Burry ran Scion Capital in the 2000s and became known for betting against subprime mortgages. His trade made him $100 million personally and $700 million for investors. The story became the book and movie “The Big Short,” where Christian Bale played him.

He recently shut down his SEC-registered fund when assets reached $155 million. Burry now focuses on market commentary through social media and a new Substack. His fund previously held short positions on Nvidia, which he revealed last month.

Burry asked followers to send evidence of Nvidia GPUs being stored in warehouses. He wrote that some people had already contacted him with information. The investor said the responses were “getting interesting” but he needed more proof.

He defended short-term trading strategies in his weekend posts. Burry wrote that holding short positions for five or ten years would be unrealistic. He criticized reporters who examined his calls years after he made them.

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