Michael Burry Warns of “Stealth Bubble” in 2025 Markets
Investor and hedge fund manager Michael Burry, best known for predicting the 2008 housing market crash, has issued a new warning about market conditions in late 2025. According to recent disclosures and social media statements, Burry believes that global markets are entering what he calls a “stealth bubble” — one that is forming quietly beneath record-level optimism in stocks, artificial intelligence companies, and high-risk corporate debt.
Burry, who heads the investment firm Scion Asset Management, has repeatedly cautioned investors about over-concentration in technology stocks and the growing disconnect between asset valuations and economic fundamentals. His latest commentary suggests that while inflation appears stable, the underlying pressures in consumer debt, commercial real estate, and liquidity are worsening.
Market Overconfidence a Key Risk, Says Burry
Burry argues that the current environment mirrors the complacency seen before previous financial downturns. He points to the sharp rise in margin debt, the explosion of AI-driven investment products, and a surge in speculative retail trading as signs that the market is ignoring structural fragilities.
According to Burry, corporate earnings growth in multiple sectors is flattening while market valuations continue to climb. This, he says, is a hallmark indicator of late-stage speculative euphoria.
In a recent commentary circulated among financial analysts, he wrote that investors may be “pricing in a world that does not exist,” warning that too many portfolios are now concentrated in the same small group of megacap tech stocks. Several analysts say his view aligns with concerns from the Federal Reserve about potential overheating in the tech sector.
Scion’s Investment Moves Signal Defensive Posture
While Burry has not made a direct prediction of an imminent crash, his latest 13F regulatory filing shows a significant shift in Scion Asset Management’s strategy. The firm has reportedly increased positions in defensive sectors, including healthcare and commodities, while trimming exposure to long-duration equities.
Market watchers were quick to note that Burry increased his hedging activity through strategic put options during the past quarter. This pattern is consistent with his earlier moves before major market downturns — including his now-famous bet against mortgage-backed securities in the mid-2000s.
Despite this, Burry has also taken selective stakes in undervalued international companies and energy stocks, suggesting he sees pockets of opportunity amid the broader risk landscape.
Tech Hype and AI Valuations Under Scrutiny
A major focus of Michael Burry’s warning revolves around AI-fueled stock valuations. The global rush toward artificial intelligence investments — following breakthroughs by U.S., Chinese, and European tech leaders — has pushed startups and public companies to record-high valuations.
Burry argues that markets may be vastly overestimating short-term profitability of AI platforms while underestimating the high operational costs and slow commercialization timeline.
He has called the current environment the “most crowded trade I’ve seen in years,” referencing the heavy concentration of global funds in AI-exposed assets. Several economists agree that a correction in this sector could ripple across broader indices.
Economic Indicators Add to Burry’s Concerns
Alongside market trends, Michael Burry highlights several macroeconomic concerns:
- Rising credit card delinquencies, especially among younger consumers
- Commercial real estate weakness, particularly in office properties
- Slowing global GDP growth
- High interest rates deeply affecting household borrowing costs
Burry believes these factors could converge into what he describes as a “rolling recession”, affecting different sectors at different times rather than triggering a sharp single downturn.
Investors Divide on Whether Burry Is Right Again
Financial experts remain split. Some argue that Burry is overly pessimistic and point to strong labor markets, corporate earnings stability, and resilient consumer spending. Others say his track record justifies paying attention, even if markets appear healthy today.
Regardless, his warnings are now part of a larger debate about the direction of markets in 2026 and beyond.
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