Warren Buffett sits on $400 bn cash as Michael Burry warns of AI bubble. Is a massive market crash coming?

Whereas Wall Avenue continues to hit lifetime highs as synthetic intelligence shares rally, legendary investor Warren Buffett’s Berkshire Hathaway is sitting on practically $400 billion in cash, whereas Michael Burry — finest recognized for accurately predicting the 2008 housing disaster — continues to sound the alarm over a doable AI bubble.

Berkshire Hathaway not too long ago reported a report cash pile close to $400 billion on the finish of the primary quarter of 2026. Earlier this month, Buffett instructed CNBC that it’s not the best surroundings to take a position Berkshire’s report cash hoard. A number of market analysts defined that the rationale behind this transfer could also be expectations of a sharper crash forward.

Buffett additionally performed down current volatility in world markets, suggesting that present circumstances are removed from the dislocations that traditionally created main shopping for alternatives. He identified that Berkshire has seen far sharper drawdowns up to now, together with declines of greater than 50%, including that the current surroundings doesn’t warrant aggressive deployment of capital.

Michael Burry, popularly recognized for accurately predicting the 2008 housing disaster, remained agency on his bets towards AI tech giants, triggering AI bubble worries. The analyst in a current Substack Chat stated that he sees many indicators, each technical and elementary, lining up for a similar conclusion as the Dotcom crash.

“1999 went the place no market had gone earlier than, and I might say so can this one…It’s already there on a quantity of indicators,” he stated, arguing that massive enterprise capital flows, rising AI debt issuance, and excessive market optimism are creating circumstances the place valuations might detach from financial actuality.

AI growth reshuffles world market order
This comes as the AI growth coupled with the continued Iran-US battle led to a main reshuffling of the worldwide inventory market hierarchy, with South Korea and Taiwan overtaking a number of long-established Western exchanges.

South Korea’s Kospi has emerged as the shining star amongst all inventory markets to date this yr, skyrocketing to contemporary lifetime highs final week whereas most of the worldwide markets crashed. In keeping with a report by The Monetary Occasions, Kospi has surged multi fold in lower than 18 months, with this bull run outpacing tech-heavy Nasdaq’s bull run within the Nineties, simply earlier than the Dotcom crash.

Regardless of worries, South Korea has leapfrogged the UK into eighth place, in response to HSBC information monitoring world equity-market capitalisation rankings, as quoted by CNBC.

Late in April this yr, one other Asian market boomed. Taiwan’s inventory market overtook Canada’s to change into the world’s sixth-largest, helped by sturdy investor demand for synthetic intelligence-related shares and the sharp rise in shares of Taiwan Semiconductor Manufacturing Co. (TSMC).

Notably, Taiwan’s inventory market was solely the world’s twelfth largest in 2004 whereas South Korea ranked thirteenth, the report by CNBC additional stated, highlighting how the market order has modified through the years. At the moment, the highest 10 inventory markets in phrases of complete market capitalisation, as per information by HSBC quoted by the report are as follows: US, China, Japan, Hong Kong, India, Taiwan, Canada, South Korea, UK and France.

Whereas optimism round AI stays excessive, the report highlighted that the rally has led to an excessive focus of capital into a handful of AI companies. TSMC alone accounts for over 40% of Taiwan’s market capitalization, whereas Samsung Electronics and SK Hynix collectively make up a report 42.2% of South Korea’s Kospi index, the report stated.

Dotcom crash
Round 25 years in the past, the roughly five-year dot-com bubble burst, leaving trillions of {dollars} in funding losses in its wake. Between 1995 and 2000, the S&P 500 practically tripled whereas the Nasdaq 100 soared 718%.

Nevertheless, as the tech bubble pushed by excessive enthusiasm across the web collapsed, greater than 80% of Nasdaq’s worth was erased and the S&P 500 was virtually minimize in half by October 2002.

As world markets crashed, Indian equities had been no exception. Between 2000 and 2002, the Nifty 50 tumbled roughly 51% peak-to-trough, NSE stated. They nonetheless quickly recovered all losses.

(Disclaimer: Suggestions, options, views and opinions given by the consultants are their very own. These don’t signify the views of The Financial Occasions)