Michael Burry & Ray Dalio Warn The AI Bubble Is Popping

Daniel Pronk•Oct 9, 2026

Summary

Daniel argues that the pessimistic market outlooks shared by prominent bears are fundamentally flawed. Daniel counters Michael Burry’s claims of an AI bubble and fraudulent circular financing by highlighting that nearly $1 trillion in real third-party demand exists for AI technologies. Daniel also disputes Ray Dalio's prediction of a debt-induced market crash within the next three years, noting that such defensive postures have historically led to significant underperformance compared to the S&P 500. Daniel suggests that rising bond yields are a short-term reaction to geopolitical events like the Iran war rather than a total loss of faith in the US dollar.

Daniel states that investors should adopt an optimistic mindset to identify opportunities created by temporary fears. Aligning with views from Bruce Flatt and Howard Marks, Daniel suggests that current inflation is geopolitical and will eventually subside. Daniel emphasizes that high-quality businesses are being unfairly punished by the market's focus on short-term interest rate fluctuations, creating a compelling buying environment for long-term investors.

Brookfield Asset Management (BAM): Daniel highlights this as a primary investment due to the expectation that the business will compound earnings by 15-20% annually over the next five years. Daniel notes the attractive 4.5% dividend yield and a forward PE of 21, which Daniel describes as an absolute steal for a company of this quality. Daniel believes the dividend yield on cost for shares purchased today could reach 9% in five years and 18% in ten years.

Construction Partners (ROAD): Daniel is aggressively buying this stock as it trades near six-year lows despite the company raising guidance for three consecutive quarters this year. Daniel points out that 80-85% of its revenue for the next year is already contractually locked in, providing high certainty. Daniel also notes that the business has effective inflation hedges within its contracts to protect margins from rising costs.

Nvidia (NVDA): Daniel mentions this stock in the context of market valuation, noting it trades at a forward PE of 19. Daniel suggests the market is concerned about the sustainability of its growth due to circular financing concerns, though Daniel believes the underlying demand for compute from companies like Google and Meta remains robust.

Mentioned Stocks

NVDA

Sentiment: HOLD

Reasoning: Daniel discusses Nvidia in response to Michael Burry's bearish claims. Daniel notes that Nvidia trades at a forward PE of 19, suggesting the market already has concerns about the quality or sustainability of its growth. However, Daniel argues that the demand for its chips is real and driven by massive investments from major tech enterprises.

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ROAD

Sentiment: BUYAction: BOUGHT

Reasoning: Daniel is increasing the position because the stock is trading near six-year lows despite the company raising its financial guidance every quarter this year. Daniel emphasizes that 80-85% of next year's revenue is already contractually locked in and that the company has mechanisms to pass on higher raw material costs to customers, protecting its margins.

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BAM

Sentiment: BUYAction: BOUGHT

Reasoning: Daniel is buying because the business is expected to compound earnings by 15-20% annually over the next five years. Daniel notes the attractive 4.5% dividend yield and a forward PE of 21, which Daniel describes as one of the most attractive risk-reward opportunities in the market today. Daniel believes the dividend will double every five years, potentially leading to a very high yield on cost for long-term holders.

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