Since the mid-19th century, when gold was first discovered in California, the United States witnessed one of the largest internal migration waves in its history. Hundreds of thousands rushed west, driven by the hope of instant wealth—even though only a tiny fraction actually found gold.
Every time a miner struck gold, the frenzy intensified, even as the odds of success decreased due to overwhelming competition. Amid this chaos, a peculiar class of wealthy individuals emerged—people who didn’t profit from gold itself but from selling tools to gold seekers: shovels, picks, and basic digging supplies.
A miner might or might not find gold—but everyone, without exception, needed to buy tools first.
Thus emerged what we now call the “pickaxe seller model”: the true winners are not those searching for gold, but those selling the tools.
But this model carries a historical trap: once people realize the land doesn’t hold enough gold, they stop buying—and the entire business collapses.
This classical phenomenon repeats today in multiple industries… especially in AI and modern technology.
Enter Michael Burry: The Warning That Shook the Market
On November 24, 2025, renowned American investor Michael Burry sparked a major controversy. Burry—who predicted the 2008 crisis before anyone else—accused Nvidia of being the modern embodiment of a “pickaxe seller” during the AI boom.
According to Burry, American tech companies are living through an irrational frenzy over artificial intelligence, pouring hundreds of billions—perhaps trillions—into its infrastructure despite deep uncertainty about real returns.
While companies take massive risks, Nvidia stands at the center selling the chips that AI development cannot proceed without. This made Nvidia the biggest beneficiary of the AI wave, reaching a historic valuation of $5 trillion.
Burry argues that this situation cannot last forever, and that a collapse in Nvidia’s value could trigger a financial crisis even worse than 2008 if companies eventually discover their AI investments yield minimal returns.
Who Is Michael Burry, and Why Does the Market Fear Him?
Burry gained global fame in 2005 when he made a bold, unprecedented bet: he bought credit default swaps (CDS) against the worst mortgage-backed securities, predicting their collapse even though the entire market regarded them as safe.
Between 2005 and 2007, he studied the market meticulously, selected the weakest bonds, and paid small insurance premiums in exchange for the right to collect their full value when the borrowers inevitably defaulted.
When the housing market crashed in 2007–2008, the bonds imploded one after another, earning Burry a personal profit of $100 million and $725 million for his investors.
Since that moment, every warning he issues is taken extremely seriously.
Why Did Nvidia Surge in Such an Unprecedented Way?
The release of ChatGPT in November 2022 triggered a global AI arms race. In 2024 alone, tech companies spent around $200 billion on AI, rising to $400 billion in 2025, and expected to reach $600 billion in 2026.
Most of this money is spent on Nvidia’s industry-leading chips.
Key signals of the extraordinary demand:
In October, Jensen Huang revealed that Nvidia has $500 billion in pending orders.Corporations and governments worldwide are fighting to secure supply.
Nvidia’s valuation soared from $385 billion (2022) to over $5 trillion (2025).
But half of this value is built on future expectations, not realized profit.
Is AI Delivering Real Returns? Warning Signs Are Growing
A study by MIT in August 2025 revealed that 95% of AI adoption cases showed little to no positive impact on corporate earnings.
If this doesn’t change soon, the rush to build data centers will cool, and corporate demand for Nvidia’s chips may fall as quickly as it rose.
The Competitor Threat: Google Breaks the Monopoly
In November 2025, Google unveiled “Gemini 3,” regarded by many as the most powerful AI model to date. The surprise wasn’t just its performance, but the fact that it was trained entirely using Google’s TPU chips, not Nvidia’s.
This triggered immediate panic in the market and caused Nvidia’s stock to drop.
Google’s chips aren’t the strongest, but they are:
CheaperMore energy-efficient
“Good enough” for most large-scale training
More importantly, companies like Meta are now in negotiations to buy them in bulk.
The Data Center Crisis: Massive Hidden Debt
Tech companies are building data centers at unprecedented speed—yet their cash flows don’t cover the cost.
According to Morgan Stanley, U.S. companies plan to spend $3 trillion on AI infrastructure by 2028, but their cash flows cover only about half that amount.
To avoid showing debt on balance sheets, companies are resorting to 2008-style maneuvering.
For example:
Meta created a special-purpose entity with Blue Owl to finance a $27 billion data center—without reporting it as direct debt.
If the AI bubble bursts, usage will drop, contracts will cancel, and lenders will be left exposed to massive losses.
It is eerily similar to the mortgage market—only bigger.
Conclusion
Michael Burry’s warning isn’t mere pessimism—it’s a historically grounded alert:
Companies are spending billions without clear returnsTools (AI chips) are insanely in demand—but demand could collapse overnight
Hidden debt structures resemble pre-2008 tactics
The market behaves as if AI growth will last forever
Will a collapse happen?
No one can say for sure.
But one thing is certain: we are living through a new kind of gold rush… and it might end the same way.
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