'The market has voted': Michael Burry says Big Tech's AI spending is dragging down the S&P 500 — while Apple wins

"Big Short" capitalist Michael Burry's latest X station is erstwhile again predicting doom for the AI industry.

"The marketplace has voted and the results are clear," Burry said successful his July 27 post. The station besides includes 2 screenshots of charts showcasing Magnificent Seven companies' latest banal performances and valuation changes.

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Both charts are taken from a caller Bloomberg article. The archetypal shows a antagonistic correlation betwixt each tech company's guardant capex (or superior expenditure) estimates and its banal performance.

The 2nd shows that large tech companies: Nvidia, Microsoft, Amazon, Alphabet, and Meta — 5 of the companies that marque up the Magnificent Seven — person each seen their valuations diminution nether their 10 twelvemonth mean arsenic of July 24.

Apple, which boasts comparatively restrained AI spending, is by acold the outlier successful S&P 500 show successful the archetypal chart. In the 2nd chart, it's the lone institution with a valuation supra its 10-year average.

Here's what could beryllium down this show — and wherefore Burry mightiness beryllium interested.

Some of the radiance mightiness beryllium coming disconnected of monolithic AI spending

AI has been successful an unprecedented roar ever since ChatGPT entered the representation successful precocious 2022. Companies are spending hundreds of billions of dollars connected AI infrastructure — and person mostly been rewarded for it.

That mightiness alteration soon.

People are starting to propulsion backmost connected immoderate parts of AI usage that were antecedently embraced. Before, companies tokenmaxxed by encouraging their employees to usage arsenic overmuch artificial quality arsenic they wanted — oregon more.

But tokens are getting progressively costly arsenic AI companies walk much of their expenses connected to their customers. In response, companies are starting to propulsion backmost connected AI usage, particularly arsenic reports travel backmost showing AI isn't arsenic bully astatine reducing workloads arsenic antecedently thought.

At the aforesaid time, regular Americans are starting to propulsion backmost connected AI companies' accelerated information halfway creation. A Consumer Reports survey recovered that information centers are making energy much costly for the radical who unrecorded adjacent to them, and radical who unrecorded adjacent information halfway operation are reporting ecological consequences.