Michael Burry called Ares Management’s analysis of AI financing “need-to-know-now” information.
- Ares mapped about $573 billion across 26 disclosed financings over the past 12 months.
- The deals link major AI companies through debt, leases, chip supply, customer contracts and guarantees.
- Ares warned that the connected deals depend on sustained AI spending and could come under pressure if revenue disappoints.
“The Big Short” investor Michael Burry warned late Sunday that a slowdown in AI spending could pressure an interconnected financing network, after reviewing an Ares Management analysis of $573 billion in deals tied to the industry’s biggest players.
The $573B Bet On AI Spending
Burry had been preparing the next installment of his “Heretic’s Guide to AI’s Stars” series, focused on how the buildout is financed. Then he read Ares’ Fall 2026 alternative credit newsletter and published an unscheduled “Short Thoughts” post. He called the findings “need to know now” information and “can’t-wait info.” He also called the report “mainstream Wall Street coming around to my view.”
Ares’ matrix covers about $573 billion across 26 disclosed financings over the past 12 months, spanning corporate bonds, data center construction loans, leases, GPU-backed borrowing and financial guarantees.
The financing ties together some of AI’s biggest names, including Meta, Oracle, Microsoft, Amazon, Google, Nvidia, OpenAI and Anthropic. Across the deals, they appear in different roles, including borrowers, customers, chip suppliers, tenants or guarantors, meaning that a change in one company’s spending could affect others connected to it.
Burry drew attention to Ares’ warning that “every transaction, obligation, backstop, guarantee and deal” in the financing web assumes sustained AI spending. Ares said that if revenue disappoints and a few boards redirect capital, the pressure could spread through connected deals, triggering guarantees “precisely when the guarantors are at their weakest.”
Ares compared the potential chain reaction to the vendor financing that amplified the telecom downturn of 2000.
Insurers Enter Burry’s Crosshairs
The next question is who holds the debt. Burry put the combined float of U.S. and Bermuda insurers at a little more than $10 trillion and said he has been gathering insurance data for months. He plans to bring the research into Part VI of his series. Ares, using a different measure, cited $9 trillion in U.S. insurers’ invested assets.
Ares said insurance balance sheets are a major source of capital for the digital infrastructure buildout. In its report, the firm pointed to Meta and BlackRock’s $14 billion El Paso data center site, saying fire coverage was capped at $450 million, or 3% of the project’s value. Ares contrasted the limited property coverage with insurers’ willingness to hold investment-grade debt related to such projects.
Ares said digital infrastructure accounted for 42% of investment-grade private placements year to date, while at least 24 data center securitizations were issued over the past 12 months.
Burry Says Chip Depreciation Is ‘Very, Very Real’
Burry also turned to the chips behind some AI loans. He pointed to an Ares chart depicting a 51% decline in the Nvidia H100’s residual value over three years. Rapid changes in chip value can complicate loans backed by the hardware.
This is why lenders demand residual-value guarantees, Burry argued. Manufacturers and cloud providers offer backstops “not because they want to. Because they have to,” he said, calling chip depreciation “very, very real.” Such guarantees can protect lenders against a shortfall in an asset’s future value, depending on the deal’s terms.
Burry said he expects to publish Part VI, covering the financing web and his insurance research, in a few weeks. Part VII will examine neo-cloud providers including CoreWeave and Nebius. He ended his post with a warning: “Bubbles are indeed painfully obvious. Painfully.”
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