Warren Buffett sits on $400 bn money as Michael Burry warns of AI bubble. Is an enormous market crash coming?
Berkshire Hathaway just lately reported a file money pile close to $400 billion on the finish of the primary quarter of 2026. Earlier this month, Buffett instructed CNBC that it isn’t the best setting to take a position Berkshire’s file money 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 situations are removed from the dislocations that traditionally created main shopping for alternatives. He identified that Berkshire has seen far sharper drawdowns prior to now, together with declines of greater than 50%, including that the current setting doesn’t warrant aggressive deployment of capital.
Michael Burry, popularly identified 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 mentioned that he sees many indicators, each technical and basic, lining up for a similar conclusion because the Dotcom crash.
“1999 went the place no market had gone earlier than, and I’d say so can this one…It’s already there on a lot of indicators,” he mentioned, arguing that huge enterprise capital flows, rising AI debt issuance, and excessive market optimism are creating situations the place valuations could detach from financial actuality.
AI growth reshuffles world market order
This comes because the AI growth coupled with the continued Iran-US battle led to a significant 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 because the shining star amongst all inventory markets to this point this 12 months, skyrocketing to recent lifetime highs final week whereas a lot of the world markets crashed. Based on 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 Nineteen Nineties, simply earlier than the Dotcom crash.
Regardless of worries, South Korea has leapfrogged the UK into eighth place, in keeping with HSBC information monitoring world equity-market capitalisation rankings, as quoted by CNBC.
Late in April this 12 months, one other Asian market boomed. Taiwan’s inventory market overtook Canada’s to turn out to be 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 mentioned, highlighting how the market order has modified through the years. At the moment, the highest 10 inventory markets by way of whole 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 right into a handful of AI corporations. TSMC alone accounts for over 40% of Taiwan’s market capitalization, whereas Samsung Electronics and SK Hynix collectively make up a file 42.2% of South Korea’s Kospi index, the report mentioned.
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 almost tripled whereas the Nasdaq 100 soared 718%.
Nevertheless, because 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 lower in half by October 2002.
As world markets crashed, Indian equities have been no exception. Between 2000 and 2002, the Nifty 50 tumbled roughly 51% peak-to-trough, NSE mentioned. They nevertheless quickly recovered all losses.
(Disclaimer: Suggestions, strategies, views and opinions given by the specialists are their very own. These don’t characterize the views of The Financial Occasions)
