I'm not sold on the circular funding argument either, though it certainly wouldn't surprise me if it (or some other form of corruption/collusion) turned out to be true to some extent. Personally, I firmly believe that Silicon Valley jumped-the-gun early on AI investment for fear of being left behind and over-estimating the potential of LLM-based AI (at least in the short term), and now are stuck in the awkward position of not being able to admit it without shaking investor confidence which they don't want to do as they still need significant more investment to mature the tech to a point that it starts paying significant returns with respect to the investment.

> Michael Burry is betting against AI growth translating into real profits as a whole, not the circular funding.

It's not even so much that he's betting against that translating into profits, but rather that the pace of infrastructure investments is too out of sync with the timeline of realizing those profits, and also that throwing money at the problem doesn't necessarily move that break-even ROI timetable forward in a sustainable way (beyond a certain point).

That's what popped the DotCom bubble. It was the fundamental fallacy that potential profits and revenues were directly proportional to and/or dependent on investment, and even more specifically that more investment would realize not just greater returns, but the belief that more investment yielded greater return sooner which just wasn't true - at least not beyond a certain point. So while many people associate the Pets.com flop with the dotcom bubble, it was actually over investment in and by Cisco (chiefly, but not solely) that really precipitated the bubble bursting.

A lot of people see lots of parallels with the AI bubble in that context. If the ROI timeframe is greater than the viable lifecycle of hardware bought today, how wise is it to spend big today? Does it accelerate the timeframe if you spend more, and if so by how much, and up to what point? There's also something to be said about market momentum and strategic positioning, but that's hard to quantify, especially in the context of forecasting how impactful it will be on realizing your ROI at some indefinite point in the future.