Famous investor Michael Burry is sounding the alarm on the artificial intelligence (AI) financing boom, warning that current high-yield debt levels dangerously mirror the 1999 tech bubble or the dot-com era and explicitly rejecting the notion of a “cleaner” AI investment cycle.
The ‘Cleaner’ Market Illusion
Responding to recent macroeconomic data on X, Burry challenged the prevailing narrative surrounding the quality of AI-related debt.
Referencing data compiled by Apollo Global Management’s Chief Economist Torsten Slok, Burry pointed out that a staggering 38% of current high-yield bond issuance is now linked to AI. A high-yield bond, also known as a junk bond, is a corporate bond issued by companies with lower credit ratings.
He drew a direct, sobering comparison to the tech-media-telecom (TMT) bubble, noting that TMT bonds constituted 40% to 50% of high-yield issuance in the year 2000.
“High yield debt at 38% today vs 40%-50% back then belies the idea that today’s AI debt issuance is cleaner, backed by more profitable companies today,” Burry stated.
Echoes Of The 1999 TMT Bubble
Burry further emphasized the severe historical risks by pointing to the devastating aftermath of the early 2000s market crash. He warned investors that over $100 billion of investment-grade debt issued during the 1999-2000 frenzy eventually became “junk by 2002.”
The frightening parallels extend deeply into the venture capital sector as well; while broader TMT funding hit 80% of all venture capital funding in 1999, an even higher 87% of VC funding today is directed strictly at AI.
Penetrating ‘Every Corner’ Of Finance
Burry’s stark commentary was originally sparked by a May 18, 2026, macroeconomic report authored by Slok. Slok’s analysis emphasized that the AI boom is rapidly “penetrating every corner of financial markets.”
Slok noted that what initially began as an “equity market phenomenon has become a capital markets-wide transformation.”
Beyond venture capital and high-yield bonds, year-to-date net issuance data shows AI now also accounts for a massive 49% of investment-grade bond issuance, increasingly pushing out non-AI investments across multiple channels.
Here’s a list of a few AI-linked ETFs for investors to consider.
| ETF Name | 6-Month Performance | YTD Performance | One Year Performance |
| iShares US Technology ETF (NYSE:IYW) | 20.40% | 17.31% | 47.69% |
| Fidelity MSCI Information Technology Index ETF (NYSE:FTEC) | 20.76% | 17.98% | 45.88% |
| First Trust Dow Jones Internet Index Fund (NYSE:FDN) | 1.67% | -0.32% | 6.75% |
| iShares Expanded Tech Sector ETF (NYSE:IGM) | 22.41% | 18.35% | 47.63% |
| iShares Global Tech ETF (NYSE:IXN) | 28.50% | 24.70% | 53.42% |
| Roundhill Magnificent Seven ETF (BATS:MAGS) | 7.27% | 4.59% | 32.46% |
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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