Burry Warns Market: 'Tank Hard' Before OpenAI IPO or Face Disaster

Michael Burry, the investor who predicted the housing market bubble in The Big Short, has called for the stock market to 'tank hard' before OpenAI's initial public offering (IPO). Burry believes this will prevent OpenAI and Anthropic from raising billions of dollars through their IPOs. According to reports, OpenAI is seeking to raise $30 billion at a valuation of $1.4 trillion.

Burry's concern stems from the massive spending commitments that OpenAI has made, totaling $750 billion by 2030. However, its revenue this year is only around $40 billion. To put it simply, OpenAI needs public investors to fund its expenses, and Burry thinks this will have disastrous consequences for the market.

Microsoft, which has a stake in OpenAI, is also exposed due to its reliance on OpenAI's ability to keep paying for compute services. Microsoft's capital spending rose from $23.89 billion in fiscal 2022 to $115.95 billion in fiscal 2026, nearly five times as much. This increased spending comes straight out of free cash flow.