Michael Burry — the investor known for predicting the housing meltdown ahead of 2008 — has turned his attention to one of the market’s most beloved themes: artificial intelligence.

Burry recently deregistered his hedge-fund firm, Scion Asset Management, removing it from routine regulatory disclosures. But he remains actively investing, and he is doubling down on what he sees as the next major mispricing in markets.

Central to that view is Phil Clifton, Scion’s former associate portfolio manager, whose research underpins the skepticism. Clifton argues that while generative AI adoption is accelerating, the economics behind the industry’s massive infrastructure buildout have yet to justify the cost.

In his farewell letter to Scion investors in late October, Burry called Clifton “the most prodigious thinker” he’s ever encountered. CNBC obtained several of Clifton’s research notes from earlier this year, written before he launched his own firm, Pomerium Capital, that help outline Scion’s bearish thesis on AI.

The investment world is “expecting far more economic importance out of this technology than is likely to be provided,” Clifton wrote. “Just because a technology is good for society or revolutionizes the world doesn’t mean that it’s a good business proposition.”

Low margins

On the surface, AI usage appears ubiquitous. More than 60% of U.S. adults say they interact with AI at least several times a week, according to Pew Research Center. Yet Clifton said the economics on the demand side are “surprisingly small.”

OpenAI — market leader and cultural phenomenon — is set to surpass $20 billion in annualized revenue this year, but that figure is tiny compared with the size of the AI build-out. Hyperscalers have quadrupled their capex spend in recent years to almost $400 billion annually, with expectations of $3 trillion over the next five years, according to Man Group.

“We assume other generative AI services in aggregate are insufficient to justify the sums being spent on infrastructure,” Clifton wrote.

History’s warnings

Scion sees a clear historical parallel with the early-2000s telecom boom, when heavy investment in fiber-optic networks far outpaced actual usage. U.S. capacity utilization fell to about 5%, and wholesale telecom pricing collapsed roughly 70% in a single year, Scion noted.

Clifton argues the cloud giants are now in a comparable race, expanding AI infrastructure on the assumption that future demand will catch up eventually. But if mass AI adoption takes longer than expected, the economics on these massive data center deals could become untenable.

Some Big Tech companies are starting to wobble on commitments already, he noted. Microsoft has canceled data center projects set to use 2 gigawatts of electricity in the U.S. and Europe, citing an oversupply. Alibaba’s chairman has warned a bubble is forming in AI infrastructure.

The Nvidia Exposure

No company has benefited more from AI spending than Nvidia. The stock has surged alongside unprecedented GPU orders from cloud providers. But Scion questions whether those customers will ever generate economic returns on that investment.

A key element here is depreciation policy. Tech giants have lengthened server lifespans on the books to six years. Yet Nvidia’s product cycles run every year now, making older chips functionally obsolete and less energy-efficient, long before they’ve been written down, Scion claims.

Nvidia has pushed back at this claim, saying its hardware remains productive far longer than critics say, thanks to efficiencies driven by the company’s CUDA software system.

Still, Burry and other critics are seizing on a contradiction. Nvidia says the newest chips are superior in performance, efficiency and capability, at the same time as it promises that older chips remain economically viable. One of those defenses, they say, has to give.

Burry has launched a new Substack newsletter to lay out his bearish thesis on AI. Whether generative AI ultimately proves to be a bubble remains to be seen, but for now, Burry is again positioning himself on the cautious side of a fast-moving story.

Concerns about the steep valuations of artificial intelligence (AI) stocks and a questionable outlook for an interest rate cut in December weighed on investor sentiment in recent trading sessions. For now, however, Nvidia’s solid earnings last week seemed to undermine the idea that everything tied to AI investment is in a bubble.

Investors looking to capitalize on the recent selloff and pick up some attractive stocks for the long term can track the recommendations of top Wall Street analysts. These experts can help provide key insights into a company’s growth potential.

Here are three stocks favored by the Street’s top pros, according to TipRanks, a platform that ranks analysts based on their past performance.

Microsoft

Windows and Xbox owner Microsoft (MSFT) is viewed as one of the major beneficiaries of the AI boom. Last month, the company reported better-than-expected results in its fiscal first quarter, with revenue from the Azure cloud business growing by 40%.

Recently, Baird analyst William Power initiated coverage on Microsoft with a buy rating and a price target of $600. TipRanks’ AI Analyst is also optimistic on MSFT, giving it an “outperform” rating and a price target of $628.

“Microsoft is leading the AI revolution with infrastructure and applications, aided by its OpenAI relationship, providing an end-to-end AI platform for enterprises and consumers alike,” said Power, explaining his optimism.

Power sees MSFT’s partnership with ChatGPT parent OpenAI as a key differentiator, helping it run AI at scale and speed. The 5-star analyst said that after a commitment to invest $13 billion, Microsoft recently announced an incremental $250 billion Azure investment over several years.

The analyst discussed the impressive growth in MSFT’s total revenue and Azure business in the September quarter, with the cloud business now constituting 60% of the overall top line. Power also highlighted the strength in Microsoft’s core applications, including Microsoft 365, LinkedIn and Dynamics. He noted that MSFT’s revenue growth in Q1 FY26 was accompanied by a solid operating margin of 49% and free cash flow margin of 33%. Microsoft’s strong margins are ensuring continued double-digit EPS growth, he said.

Power believes in Microsoft’s near- and long-term potential, despite any immediate pressure stemming from AI capital spending concerns.

Power ranks No. 287 among more than 10,100 analysts tracked by TipRanks. His ratings have been successful 57% of the time, delivering an average return of 17%. See Microsoft Ownership Structure on TipRanks.

Booking Holdings

Online travel agent (OTA) Booking Holdings (BKNG) is another pick this week. The Priceline and Kayak owner posted impressive third-quarter results, with double-digit gains in gross bookings and revenue.

Impressed by the Q3 performance and attractive valuation, Wedbush analyst Scott Devitt upgraded BKNG to buy from hold with a price targe of $6,000. By comparison, TipRanks’ AI Analyst has a “neutral” rating on Booking Holdings with a price target of $5,406.

“Booking remains the best-positioned OTA in our view,” benefiting from several positives, from the company’s scale and diversification to solid liquidity to free cash flow conversion, Devitt said.

The top-rated analyst also noted management’s impressive history of successfully executing major strategic initiatives. Devitt highlighted Booking Holdings’ widening market share in alternative lodging while optimizing costs and driving efficiencies. The company’s cost savings are supporting reinvestment in growth initiatives to achieve longer-term targets, he said.

Additionally, Devitt discussed Booking’s impressive growth across key metrics in the third quarter amid better-than-anticipated global travel demand. Third-quarter gross bookings growth of 14% surpassed management’s guidance by 400 basis points, the analyst said. ASs a result, Devitt raised his 2025 gross bookings growth estimate by 100 basis points from his prior forecast, to 11.5%. Further, he expects BKNG to report adjusted EBITDA of $9.8 billion, reflecting year-over-year margin expansion of about 180 basis points.

Devitt ranks No. 660 among more than 10,100 analysts tracked by TipRanks. His ratings have been profitable 50% of the time, delivering an average return of 12.3%. See Booking Holdings Financials on TipRanks.

DoorDash

Devitt also upgraded his rating for food delivery platform DoorDash (DASH) to buy from hold with a price target of $260. TipRanks’ AI Analyst rates DoorDash “neutral” with a price target of $211.

DASH shares took a hit when the company announced mixed third-quarter results and said it expects to spend “several hundred million dollars” on new initiatives and development in 2026.

Devitt believes that the pullback in DASH shares presents an attractive risk/reward opportunity, with the stock now trading at about 17.7x his 2027 adjusted EBITDA estimate. The Wedbush analyst noted that the post earnings selloff was mainly due to concerns about the level of capital spending and pressured profit margins.

Devitt admits that the higher level of spending will hurt near-term margins, but argues such investments in growth initiatives are warranted given that they’ll expand DASH’s addressable market and bolster its product offerings.

Specifically, Devitt highlighted management’s plans to direct incremental investments toward three key areas: “(1) creating a cohesive global tech platform, (2) building new verticals and products, and (3) scaling geographic expansion.”

Overall, Devitt is bullish on DoorDash, believing it has held a dominant position in the U.S. food delivery sector. Moreover, he noted the company’s solid execution across strategic initiatives as management pushes for long-term sustainable growth. See DoorDash Hedge Fund Activity on TipRanks.

(This is the Warren Buffett Watch newsletter, news and analysis on all things Warren Buffett and Berkshire Hathaway. You can sign up here to receive it every Friday evening in your inbox.)

Just one week after Berkshire Hathaway’s revelation last Friday that it purchased 17.8 million Class A shares of Google’s parent, Alphabet, in the third quarter (July-September), that position has increased in market value by $415 million to almost $5.35 billion.

GOOGL gained 8.4% this week while its biggest tech rivals fell significantly as Nvidia’s strong earnings failed to overcome fears of an “AI bubble.”

Alphabet shares started the week with a 3.1% boost on Monday, apparently in reaction to the news of Berkshire’s purchase.

Wednesday’s release of Google’s new Gemini 3 AI model, which is receiving positive reviews, gave the stock another push higher.

(Google’s AI momentum is reportedly beginning to worry Sam Altman at OpenAI.)

While the full evaluation of the move obviously can’t be made until months or years from now, someone in Omaha is probably smiling right now.

Warren Buffett is getting the credit in a lot of headlines, as he usually does, with many publications assuming he is responsible for everything Berkshire does.

We know that’s not the case, however, since portfolio managers Ted Weschler and Todd Combs are able to act as “free agents.”

As I noted last week, Alphabet doesn’t feel like Buffett’s “kind of stock.”

CNBC.com’s Yun Li writes the investment “likely” was the work of Weschler or Coombs, noting they have been behind many of Berkshire’s “tech-leaning” investments, including its Amazon stake, now worth $2.2 billion.

(Even before that position was first disclosed in 2019, Buffett went out of his way to tell CNBC’s Becky Quick it wasn’t his decision and “no personality change has taken place.”)

Bloomberg Opinion columnist Nir Kaissar recalls Buffett’s famous refusal to invest in a business he doesn’t fully understand, which kept him out of the internet bubble in the late 1990s, calling AI “orders of magnitude more complicated than selling books or pet food online.”

He adds, “Combine opaque technology with premium valuations, and you’re sure to lose Buffett.”

Kaissar says he has the impression CEO-designate Greg Abel may have just shown us a “very different approach than Berkshire’s shareholders are used to – notably, a new willingness to pay more now for potentially higher growth down the road, a chance Buffett rarely took, if ever.”

Berkshire has not responded to my midday email asking for clarification on who decided to make the Alphabet purchase. The company almost never reveals who bought what.

Some links may require a subscription:

Warren Buffett explains that when he says he doesn’t understand tech stocks, he means he doesn’t understand where the tech industry will be in ten years.

AUDIENCE MEMBER: In terms of these tech stocks, you say that you don’t understand them… I can’t imagine you not understanding something.

WARREN BUFFETT: Oh, we understand the product. We understand what it does for people. We just don’t know the economics of it 10 years from now.

That, I mean, you can understand all kinds — you can understand steel. You can understand home building. But if you look at a home builder and try and think where it’s going to be in five or 10 years, the economics of it, that’s another question.

I mean, it’s not a question of understanding the product they turn out or the means they use to distribute it, all of those sort of things. It’s the predictability of the economics of the situation 10 years out. And that — that’s our problem.

BRK.A stock price: $755,320.00

BRK.B stock price: $504.04

BRK.B P/E (TTM): 16.12

Berkshire market capitalization: $1,085,818,736,612

Berkshire Cash as of September 30: $381.7 billion (Up 10.9% from June 30

Excluding Rail Cash and Subtracting T-Bills Payable: $354.3 billion (Up 4.3% from June 30)

No Berkshire stock repurchases since May 2024.

(All figures are as of the date of publication, unless otherwise indicated)

Berkshire’s top holdings of disclosed publicly traded stocks in the U.S. and Japan, by market value, based on today’s closing prices.

Holdings are as of September 30, 2025, as reported in Berkshire Hathaway’s 13F filing on November 14, 2025, except for:

The full list of holdings and current market values is available from CNBC.com’s Berkshire Hathaway Portfolio Tracker.

Please send any questions or comments about the newsletter to me at alex.crippen@nbcuni.com. (Sorry, but we don’t forward questions or comments to Buffett himself.)

If you aren’t already subscribed to this newsletter, you can sign up here.

Also, Buffett’s annual letters to shareholders are highly recommended reading. There are collected here on Berkshire’s website.

— Alex Crippen, Editor, Warren Buffett Watch

Robinhood shares are heading for a brutal weekly loss as the once-red-hot trades in bitcoin and AI stocks that powered its growth lose momentum.

Shares of the trading platform slid 10.1% on Thursday, extending a sharp decline that has pushed the stock down 13.3% for the week. The slump has erased more than 27% of Robinhood’s value so far in November, a dramatic pullback after a strong run earlier this year. The stock is slightly higher in premarket trading Friday.

The latest slide reflects a sharp reversal in the risk-hungry investment activity Robinhood relies on. The company’s core business is closely tied to retail investors pouring into speculative corners of the market, particularly cryptocurrency and buzzy artificial intelligence stocks stocks.

Those trades helped fuel a resurgence in Robinhood revenue and user engagement earlier this year as bitcoin hit fresh highs and anything tied to artificial intelligence soared. But the recent rout in crypto and high-growth tech stock leaders is exposing Robinhood’s sensitivity to sentiment swings.

Bitcoin has fallen about 12% this week alone, hitting a fresh low of $80,548.09 on Friday, the lowest level since April. Shares of AI enabler Nvidia are down 5% this week.

Muddy Waters Capital’s Carson Block, best known for his short-selling campaigns, took an unusually bullish stance at the Sohn London Investment Conference on Wednesday, pitching junior miner Snowline Gold as a top takeover candidate in the mining sector.

Snowline, valued at about C$2.1 billion, has made what Block called a “first-of-its-kind” discovery in Canada’s Yukon territory, a region with limited historical production but vast geological potential, he said. The company controls a large land package in an emerging district that Block said could eventually host a new multi-deposit gold camp.

The focus is the Rogue project’s Valley deposit, which holds an estimated 8 million ounces of gold in the measured and indicated category at an average grade of 1.21 grams per ton. While Snowline has other exploration targets, Block said Valley is likely the asset that will attract interest from major producers facing declining reserves.

“This is one of the few assets globally that can move the needle for a mid- or large-cap gold miner,” Block’s presentation materials stated, calling the firm “an elephant.”

Block expects Snowline to be acquired within the next three years. If a transaction comes in the next 12 months, he sees a potential valuation of C$4 billion to C$6 billion, and suggested the price could rise further as drilling continues.

“The longer it takes for this asset to be bought, the more expensive it will be,” he said.

Snowline shares have surged more than tenfold since early 2022, when the company drilled its initial discovery hole at Valley. Still, Block argued the stock doesn’t yet reflect the strategic value of the resource in a mining industry that has seen increasing consolidation.

The Canadian-listed stock popped more than 6% after Block made his call.

Carson Block will be on “The Exchange” with CNBC’s Jon Fortt at 1 p.m. ET.