Michael Burry has warned that Anthropic's USD 965 billion valuation reflects an AI bubble, arguing that the amount could buy 78 profitable S&P 500 companies. The investor compared the company's private market value with established businesses, including Domino's, Clorox, and lululemon.
His warning comes as Anthropic prepares for a potential initial public offering (IPO), with prospective investors discussing valuations approaching USD 2 trillion. Burry shared the comparison through his Cassandra Unchained account on X. He also examined historical IPO valuations and questioned whether the AI company's long-term earnings could justify its price.
Burry described his comparison as a way to measure private company valuations against profitable businesses. His list included J.M. Smucker, Stanley Black & Decker, Deckers, and Hormel Foods.
Other companies included McCormick, Tractor Supply, NVR, Albemarle, News Corp, and Alliant Energy. He also named MGM, Wynn, DaVita, Norwegian Cruise Line, and Huntington Ingalls.
The comparison focused on the combined market value of the 78 companies rather than their revenue or earnings. Still, Burry did not specify which Anthropic valuation he used in his calculation.
Anthropic's May funding round established a USD 965 billion valuation. According to CNBC, Altimeter Capital, Dragoneer, Greenoaks, and Sequoia Capital led the USD 65 billion investment round.
Meanwhile, Burry compared Anthropic with United Parcel Service (UPS), which held the highest inflation-adjusted pre-IPO valuation between 1990 and 2000.
He placed UPS's valuation at USD 119 billion. At that level, the company traded at 26 times earnings and 2.4 times sales. UPS was 92 years old and generated an 8.6% net margin.
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Anthropic was founded in 2021, making it considerably younger than UPS was before its public listing. Its financial results also present a different picture.
According to Fortune, Anthropic's leaked draft prospectus reported a USD 42 billion net loss for 2025. Reuters reported that accounting charges, rather than operating expenses, caused most of that loss. The same document showed USD 11.5 billion in second-quarter 2026 revenue. It also indicated that Anthropic was heading toward a second consecutive operating profit.
Separately, the company outlined USD 518 billion in planned cloud and infrastructure spending over the coming years. Prospective investors have since discussed fair valuations between USD 1.8 trillion and USD 2 trillion. CNBC reported that Anthropic aims to complete its public listing before Thanksgiving.
Reuters reported that analysts expect the first major AI laboratory to list publicly to establish a pricing benchmark for the wider sector.
Burry's latest comments follow several warnings about AI spending and stock market valuations throughout 2026. In June, he questioned whether Anthropic could sustain a long-term valuation near USD 1 trillion. He argued that increasingly advanced AI models require excessive computing resources.
He also predicted that computing power would become a commodity, similar to internet access. In his view, current spending patterns presented a misleading picture of sustainable demand. On September 14, Burry criticized discussions about slowing AI development. He argued that such proposals could benefit established companies while competitors attempted to catch up.
Later, on September 29, he called for a sharp market decline to prevent the planned IPOs of OpenAI and Anthropic. He warned that the companies could destroy trillions of dollars in capital. On October 5, Burry described stock markets as entering a denial stage. He expected that period to last between six and nine months.
Michael Burry's criticism centers on Anthropic's valuation compared with profitable public companies and historical IPO benchmarks. Although Anthropic has reported strong revenue growth, its earlier losses and planned infrastructure spending remain central to the debate. Its potential USD 2 trillion IPO valuation could test public investors' appetite for AI companies.