Is the AI Bubble Bursting? Michael Burry and Hayes Reveal Market Risks

The debate over the AI bubble intensified again in September 2026. On one hand, technology and AI stocks continue to show strong performance. 

The Nasdaq Composite even closed at a record 27,122.09 on September 21, 2026. On the other hand, investors such as Michael Burry have once again questioned whether the valuations and massive spending in the AI sector can be sustained.

Meanwhile, Arthur Hayes sees the risks from a different angle. According to him, a slowdown in AI investment is not only a matter of stock valuations, but could also affect debt, credit, and global liquidity, which under certain scenarios could impact Bitcoin.

Key Takeaways

• Michael Burry highlights risks related to valuations, capital expenditures, and growth assumptions in the AI industry.
• Arthur Hayes sees potential risks in AI debt financing and its impact on liquidity.
• The impact of an AI bubble on Bitcoin is not automatically positive or negative because it depends on how the market and policymakers respond to an AI slowdown.

Why Is the AI Bubble Back in Focus?

Attention on the AI bubble has emerged as technology company valuations rise alongside massive investments in AI infrastructure.

The Nasdaq recorded a record close on September 21, 2026, while stocks such as AMD, Intel, and Meta also strengthened. This condition shows that market interest in AI remains high.

However, the question is not simply whether AI generates revenue. The main debate is whether that revenue and profit growth is sufficient to justify continuously increasing infrastructure investment.

Read Also: AI Stock Bubble at Risk of Bursting, Is Kimi K3 Competition a New Trigger?

Michael Burry and Concerns About AI

Michael Burry is known for his critical views on market valuations. In the context of AI, his concerns relate to the scale of technology companies' investments, growth assumptions, and how these assets and capital expenditures are accounted for.

One of the frequently discussed risks is the depreciation of AI infrastructure. Data centers, GPUs, and hardware require substantial investment, while AI technology is developing rapidly. 

If equipment becomes obsolete faster than expected, companies may face higher costs or need to make additional investments.

Burry also questions whether AI profit growth can continue to meet market expectations. 

These concerns become more relevant when U.S. interest rates remain at 3.75%–4.00% after the Federal Reserve raised interest rates on September 16, 2026.

Nevertheless, concerns about a bubble do not mean that the entire AI industry lacks fundamentals. 

Companies such as Alphabet, Microsoft, Meta, and Amazon continue to record real growth in their AI and cloud businesses. Therefore, the debate is more about valuations and investment levels, rather than simply whether there is demand for AI.

Be productive with AI, invest wisely. Register on Bittime and build your portfolio now.

Arthur Hayes: AI Risk Lies in Debt

Arthur Hayes takes a different approach. In his article, Safety First, Hayes argues that a slowdown in AI development could reduce demand for compute. 

If that demand falls, the revenue assumptions used to finance data centers and AI infrastructure could also change.

The problem is that some AI investments are financed through debt and credit structures. Hayes estimates that the AI sector has very large debt exposure and questions who would bear the risk if cash flows do not meet expectations.

This view represents Hayes' scenario, not certainty that an AI credit crisis will occur.

Read Also: Nvidia Stock Nears All-Time High, Will the Rally Continue?

Can the AI Bubble Make Bitcoin Rise?

This is the part that is particularly interesting for the crypto market.

According to Hayes, if the AI slowdown develops into pressure on the credit system, governments may take steps to support certain sectors or increase liquidity. 

In such a scenario, Bitcoin could potentially benefit from increased liquidity.

However, there is another scenario.

If the AI bubble bursts and investors immediately reduce risk assets, Bitcoin could instead come under pressure as investors seek liquidity. Therefore, the relationship between the AI bubble and Bitcoin is not as simple as “AI falls, Bitcoin rises.”

The impact will largely depend on whether the AI slowdown is merely a correction in technology stocks or develops into a credit problem that triggers a policy response.

The Relationship Between Nasdaq and Bitcoin

Bitcoin has also increasingly moved in tandem with risk assets and technology stocks. On September 21, 2026, Bitcoin rose more than 7% as the Nasdaq set a new record.

This means that if a major correction occurs in the Nasdaq due to AI concerns, Bitcoin could face pressure during the initial risk-off phase.

Conversely, if that correction is then followed by increased liquidity, the relationship could change. This is why the AI bubble scenario needs to be viewed in two stages: the market's reaction to risk and the subsequent policy response.

Read Also: Markets Could Crash Hard in 2026 Because of AI

What Should Investors Monitor?

Several important indicators for tracking developments in the AI bubble include:

1. Technology companies' capital expenditures, particularly investments in data centers and GPUs.
2. AI revenue growth, to assess whether it can keep pace with infrastructure investment.
3. AI credit market, including financing costs and debt quality.
4. Nasdaq performance, particularly technology stocks with high valuations.
5. Fed policy and dollar liquidity, because changes in monetary conditions can affect stocks and crypto.

Therefore, the question “will the AI bubble burst?” does not yet have a definitive answer. What matters more is whether AI business growth can sustain the level of investment and valuations that have currently been established.

Don't miss updates on AI coin prices such as Bittensor (TAO), Venice Token (VVV), NEAR Protocol (NEAR), and Internet Computer (ICP) on Bittime.

Conclusion

Michael Burry sees AI risks primarily from the perspectives of valuations, investment, and growth assumptions. Meanwhile, Arthur Hayes highlights financing, debt, and their potential impact on liquidity.

Both discuss risks through different channels. For the crypto market, AI developments still need to be monitored because a technology correction can affect risk sentiment, while the policy response to credit pressures can affect liquidity.

Therefore, the AI bubble, Nasdaq, and Bitcoin do not always move in a one-way relationship. The impact will depend on the scale of the AI correction and how markets and policymakers respond to it.

Interested in investing in the crypto AI sector? Monitor prices and start trading popular AI coins such as Bittensor (TAO), NEAR Protocol (NEAR), and Artificial Superintelligence Alliance (FET) directly on Bittime.

Bittime is a licensed and OJK-supervised Digital Financial Asset Trader (PAKD) platform — where you can buy Bitcoin in Indonesia and hundreds of other crypto assets starting from Rp10,000. The registration process is fast, secure, and can be started today.

Track the USDT to IDR conversion and the real-time price movements of your favorite crypto assets. Everything is available in one crypto investment app that can be downloaded for free from the Play Store.

Ready to get started? Register on Bittime now and execute your investment strategy with a platform trusted by millions of users in Indonesia.

FAQ

What is an AI bubble?

An AI bubble is a condition in which valuations or investments related to artificial intelligence rise significantly beyond fundamental expectations or the ability to generate profits.

Why did Michael Burry warn about the AI bubble?

Burry highlights risks related to valuations, large investments, and growth assumptions in the AI industry.

What is Arthur Hayes' view on the AI bubble?

Hayes sees risks from AI financing, particularly debt and compute requirements. He argues that an AI slowdown could put pressure on the credit market.

Can the AI bubble make Bitcoin rise?

According to Hayes' scenario, pressure on the AI sector could result in increased liquidity that could potentially support Bitcoin. However, if the market enters a risk-off phase, Bitcoin could also come under pressure.

Will the AI boom end?

There is no evidence yet that the AI boom has ended. AI investment and demand are still ongoing, while the current debate focuses more on valuations, profitability, and the sustainability of investment.