‘Some loud snapping and crackling’: Michael Burry flags risks in private markets

Michael Burry has warned that private-equity and private-credit markets are showing signs of strain, raising concerns about insurer assets and the financing behind the AI data center buildout.

In an October 8 post on his Substack newsletter, Burry said he was hearing “creaks and groans” and “some loud snapping and crackling” in private-market credit. He pointed to valuation marks and insurers’ role in financing AI infrastructure, warning that rising long-term interest rates could add pressure before data center projects generate returns.

The investor known for predicting the 2008 financial crisis also questioned the scale of AI spending, arguing that advances in AI compression could reduce computing requirements and leave some infrastructure investment as “sunk cost.” Companies’ use of smaller, cheaper AI models, including Chinese open-weight models, could further challenge assumptions about future demand for computing capacity.

In an earlier post Burry said, “We are somewhere in there, hard to say where,” referring to the market’s stage in a potential downturn. He warned that private equity and private credit were “getting torn apart under the surface of the calm” and that insurers were “holding too many bad assets.”

Notably, Burry held a bearish position in MetLife (MET) through long-dated put options. A portfolio update listed MET puts expiring in 2029.

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