Renowned investor Michael Burry, known for predicting the 2008 housing crisis and featured in “The Big Short,” has warned of a potential artificial intelligence (AI) bubble burst. If such a downturn occurs, tech stocks, including Advanced Micro Devices (AMD), could face significant losses. AMD’s gaming division saw revenue fall 31% year-over-year to under $800 million in its second quarter, while its AI-focused data center revenue surged 107% to $11.5 billion total. The numbers indicate that AMD’s gaming business is unlikely to protect the stock from an AI bubble collapse, as the company’s growth is heavily tied to AI demand.
Michael Burry, the investor who famously predicted the 2008 housing crisis and was portrayed by Christian Bale in “The Big Short,” has raised concerns about an AI bubble burst. If such a collapse occurs, tech stocks, particularly companies like Advanced Micro Devices (AMD), could suffer massive losses.
AMD holds a unique position as a manufacturer of both CPUs and GPUs. Its GPUs have traditionally served the gaming sector, but generative AI has driven demand for GPUs to power AI models. Nvidia leads the GPU market, yet AMD is also capitalizing on the AI wave with competing chips.
According to AMD’s Q2 earnings report, the company posted $11.5 billion in revenue, up 50% year over year. The AI data center segment saw a 107% revenue jump, while the gaming sector declined 31% year over year to less than $800 million. These figures suggest that a downturn in AI demand would heavily impact AMD, as its gaming division cannot absorb the loss of AI-related GPU sales. Many AI processors are purpose built and cannot be easily redirected to gaming use.
