Michael Burry
· Cassandra Unchained
· August 13, 2026 at 18:12
· ⏱ 1 min read
| Read on Substack ↗
Summary
AI revenue growth is partly an illusion: AI companies are funding each other to buy from each other, and the recycled capital shows up as revenue. Since that capital is increasingly debt, the cost of capital puts the cycle on a fixed clock, with Burry's base case for a reckoning in 2028. For markets, this means AI-related revenue quality and credit conditions matter more than headline growth.
•Bloomberg's reporting details circular financing: AI companies are funding each other to then buy from each other, a dynamic the author says is 'rather well understood.'
•The Bank for International Settlements made the same point in its June annual report, and Wall Street avoids discussing it, which the author sees as evidence it is a real problem.
•The capital injected into the AI ecosystem comes back to these companies as revenue, and markets reward the resulting 'amazing revenue growth' — but the share of that capital that is debt is increasing.
•Because the fuel is debt, the bubble has a concrete cost-of-capital deadline; Burry's base case for the clock running out is 2028.