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Michael Burry flags AI spending drag on Big Tech, points to Apple
A comparison tied to forward capex estimates and Magnificent Seven stock performance shows valuations for Nvidia, Microsoft, Amazon, Alphabet, and Meta declined below 10-year averages, while Apple stands out.
“Big Short” investor Michael Burry said the stock market has “voted” against parts of the AI industry, arguing that Big Tech’s AI spending is weighing on broader performance in the S&P 500, while Apple is an exception, according to an analysis summarized by Yahoo Finance.
Burry’s post, dated July 27, included charts based on a recent Bloomberg article. One chart shows a negative correlation between each tech company’s forward capital expenditure estimates and its stock performance, while the other indicates that five Magnificent Seven constituents, Nvidia, Microsoft, Amazon, Alphabet, and Meta, saw valuations decline below their 10-year averages as of July 24, with Apple remaining the only company above its 10-year average.
Yahoo Finance also points to potential drivers for the divergence, including concerns that the economics of AI are becoming less favorable, as AI-related costs rise and companies face pressure to pull back on certain AI usage.
The article further cites backlash tied to rapid data center expansion, including a Consumer Reports study that found nearby data centers are increasing electricity costs for residents, alongside reported ecological consequences, as part of the broader pushback Burry appears to be reacting to.
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