Burry's $1.5B AI Bet Threatens Australian Super Funds

Legendary investor Michael Burry, who famously predicted the 2008 housing collapse, has placed a massive $1.5 billion bet against AI giants NVIDIA and Palantir, warning that the technology sector may be approaching another historic bubble. This dramatic move comes as Australia's $4.3 trillion superannuation system faces unprecedented exposure to U.S. tech stocks, with approximately 20% of the total fund—roughly $800 billion—invested in American companies, many of which are the same AI-focused firms now under Burry's scrutiny. The risk exposure is set to deepen further through a new bilateral investment agreement that could channel over $1 trillion of Australian super funds into U.S. infrastructure and tech investments, creating what critics warn could be a one-way ticket for Australian retirement savings into America's next speculative boom.

The situation becomes increasingly precarious as recent geopolitical developments threaten the AI sector's stability. The U.S. government's ban on AI chip exports to China has disrupted a major revenue stream for NVIDIA, prompting China to retaliate by blocking foreign chips in state-funded data centres and backing domestic competitors like Huawei. Even NVIDIA CEO Jensen Huang has acknowledged it would be "foolish to underestimate" China's tech capabilities, while Filip Tortevski, Senior Analyst at Wealth Within, describes the situation as "no longer just a trade dispute; it's an escalating tech war." This perfect storm of factors creates significant vulnerability for Australian investors, particularly those with money in popular investment options like AustralianSuper's International Shares fund, which lists Microsoft, Apple, Amazon, Meta, and NVIDIA among its largest holdings.

As Australians grapple with rising rents, cost-of-living pressures, and stagnant wages, their retirement savings face potential devastation if the AI bubble bursts. Tortevski warns that "when bubbles burst, they don't drift down gently; they snap," meaning Australians could see their super balances fall sharply, erasing years of gains in months. The real "big short" in this scenario may be the blind faith Australians place in a system investing their futures offshore, potentially leaving Australian savers holding the bag if Wall Street's AI missteps trigger a market collapse that reverberates through the global financial system and directly impacts millions of Australian retirement accounts.