As Artificial Intelligence (AI)- related investments penetrate every corner of financial markets, hedge fund manager Michael Burry has again cautioned Wall Street about a potential dot-com-like bubble.
The famed investor has compared the ongoing stock market rally, fueled by AI demand, to the last months of the 1999-2000 bubble. He pointed to an unusual historical marker indicating that the last time the New York Knicks made the National Basketball Association (NBA) Finals was 1999.
Nine months later, the Nasdaq peaked and then collapsed by 78% over the subsequent months. With the Knicks back in the NBA Finals, he highlighted that the recent macro backdrop mirrors the dot-com bubble peak.
Key points why Burry cautions Wall Street about dot-com-like peaks
Burry has listed several fundamental reasons why Wall Street investors should remain cautious of a potential dot-com-like peak. For instance, the Nasdaq rose 84% during its dot-com peak and is up 31% over the past 12 months. Additionally, he noted that the tech sector accounted for 33% of the S&P 500 at the dot-com bubble, compared with 32% today.
Meanwhile, the Cyclically Adjusted Price-to-Earnings (CAPE) ratio, which measures how expensive the stock market is relative to corporate earnings, hit 40x at the dot-com peak, and it is at 40x again in 2026. Burry highlighted that margin debt was at record highs before the dot-com crash and is at record highs now.
During the dot-com bubble, Hedge funds held 31% of their portfolios, and in 2026, 33% was concentrated entirely in a handful of big tech names. Furthermore, he noted that upcoming Initial public offerings (IPOs) from Space Exploration Technologies Corp., Anthropic PBC, and Open Artificial Intelligence Inc. could collectively raise as much as, or more than, the combined proceeds of the roughly 300 internet and technology, media, and telecommunications IPOs of 2000.
