Warren Buffett sits on $400 bn cash as Michael Burry warns of AI bubble. Is a massive market crash coming?

Berkshire Hathaway maintains a near-record cash position of approximately $400 billion, according to reports, while prominent investor Michael Burry has cautioned against frothy valuations in artificial intelligence equities. Burry's warning draws parallels to the Dotcom era collapse, citing structural similarities in market behavior and valuation metrics. The AI sector has catalyzed a significant reshuffling of global market leadership, with South Korea's Kospi and Taiwan's stock exchange recording substantial gains that have surpassed performance of long-established Western exchanges.

Buffett's substantial cash hoard typically signals cautious sentiment—historically, the Berkshire chief deploys capital opportunistically when valuations align with intrinsic value benchmarks. Simultaneous warnings from seasoned contrarian investors like Burry underscore growing debate over whether AI-driven equity rallies reflect fundamental earnings growth or speculative excess. The geographic reallocation of market gains toward Asia-Pacific tech hubs reflects genuine structural shifts in semiconductor supply chains and AI infrastructure dominance, though it also suggests capital rotation may be pricing in sustained technology sector outperformance. For traders, the divergence between Buffett's defensive positioning and AI sector momentum presents a classic risk-reward tension: established value investors are hoarding dry powder while growth-oriented markets continue rallying. Monitor earnings quality in AI-exposed names, margin expansion sustainability in semiconductor plays, and any reversal signals in the Kospi and Taiwan indices as potential early warnings that rotation thesis may be exhausting. Elevated cash positions among seasoned allocators and cautionary rhetoric from contrarian voices warrant vigilance, even in resilient bull market conditions.

Source: Markets-Economic Times