Microsoft(US:MSFT) Benzinga·2026-01-21 07:08Core Viewpoint - Michael Burry warns of a systemic collapse in the artificial intelligence (AI) sector, suggesting that even federal intervention will not be able to prevent it [1][3]. Group 1: AI Investment Frenzy - Burry describes the current AI investment environment as a "mania" that is mathematically destined to fail, emphasizing that significant capital expenditures by major corporations will not suffice to achieve AI profitability [2]. - He predicts that the financial hole created by the AI bubble is "too big to save," despite potential government efforts to intervene [3]. Group 2: Financial Challenges - OpenAI is highlighted as a case study of the financial difficulties within the sector, with a reported loss of $12 billion in a single quarter and an anticipated cumulative negative cash flow of $143 billion before achieving profitability [4]. - The company is burning $15 million per day on its video model, Sora, indicating severe financial strain [4]. Group 3: Diminishing Returns - The industry faces a "big math problem" characterized by diminishing returns, where achieving a two-fold improvement in model performance now requires five times the energy and capital compared to previous efforts [5]. Group 4: Talent Exodus - A significant "talent exodus" is occurring within the industry, with notable departures of key executives such as former CTO Mira Murati and Chief Scientist Ilya Sutskever [6]. - Additionally, ChatGPT's traffic reportedly declined month-over-month in late 2025, while competitors like Google's Gemini gained traction [6]. Group 5: Contrasting Narratives - OpenAI CEO Sam Altman and Microsoft CEO Satya Nadella frame the substantial expenditures in AI as a "re-industrialization of America," likening it to a project ten times the size of the Manhattan Project [7]. - Burry challenges this optimistic narrative, arguing that the gap between the promised revolution and the delivered reality has never been wider [7].