Michael Burry Drops Devastating Prediction for OpenAI and Palantir Stock

TLDR

• “Big Short” investor Michael Burry says OpenAI will fail like Netscape did in the 1990s dot-com crash
• Burry claims Microsoft keeps OpenAI running while taking its technology and keeping it off Microsoft’s financial records
• Google’s Gemini AI has surpassed ChatGPT on major performance tests, creating a crisis for OpenAI
• Burry also compared Palantir to DiamondCluster, a consulting firm that collapsed after the dot-com bubble
• The investor revealed short positions on Nvidia and defended his earlier warnings about meme stocks and inflation

Michael Burry issued fresh warnings about the artificial intelligence industry over the weekend. The investor who predicted the 2008 housing crisis compared OpenAI to Netscape in a series of posts on X.

Burry wrote that OpenAI is “doomed and hemorrhaging cash” despite plans for a massive initial public offering. Netscape was the dominant web browser in the mid-1990s before it became a symbol of dot-com failures. The company lost its market position and eventually disappeared.

The comparison comes as OpenAI faces mounting competition from Google. The Wall Street Journal reported that CEO Sam Altman told staff about a “code red” situation. Google’s AI products have gained users and improved performance in recent weeks.

Microsoft Connection Raises Questions

Burry claims Microsoft keeps OpenAI alive while extracting its intellectual property. He said Microsoft maintains OpenAI off its balance sheet. The investor stated the AI industry needs OpenAI to complete a $500 billion IPO, but even $60 billion in funding “would not be near enough” for the company’s cash requirements.

OpenAI has shifted its strategy in response to Google’s progress. The company stopped work on side projects and moved teams to focus on ChatGPT. The Verge reported that Google’s Gemini 3 now beats OpenAI on key language and reasoning benchmarks.

This marks a reversal from earlier this year when GPT-4 dominated industry testing. Google transformed from an AI follower to a major competitor within one month. The search giant has gained momentum across users, performance scores, and product development.

Palantir Gets Similar Warning

Burry also drew parallels between Palantir and DiamondCluster in his weekend posts. DiamondCluster was a dot-com consulting company that grew rapidly before being acquired. The comparison suggests Burry sees weakness in Palantir’s business model despite its current stock performance.

The investor defended his track record in multiple social media posts on Sunday. He pointed to his 2021 warnings about meme stock crashes and coming inflation. A major market correction followed in 2022 when inflation reached nearly 9 percent in the United States.

Burry made his reputation running Scion Capital during the 2000s. He bet against subprime mortgages before the financial crisis and earned $100 million personally. His investors made $700 million from the trade. The story became “The Big Short” book and movie, with Christian Bale portraying Burry.

He closed his SEC-registered hedge fund when it held $155 million in assets. Burry now shares market analysis through social media and a Substack newsletter. Last month he disclosed short positions on Nvidia and criticized the chip maker’s valuation.

Burry asked his followers to provide evidence of unused Nvidia graphics processing units sitting in warehouses. He said some people had already sent him information. The investor wrote the responses were “getting interesting” and requested additional proof.

He pushed back against critics who questioned his bearish calls from years ago. Burry said no short seller maintains positions for five or ten years. He argued that examining old predictions without context misrepresents his trading strategy.

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