Is the AI Industry on the Wrong Track ?

[marcus]

From https://finance.yahoo.com/technology/ai/articles/michael-burry-sends-strong-warning-184700738.html
Title : Michael Burry sends strong warning on AI development path
By Hillary Remy , July 2026

Poster's Note : Michael Burry is an American hedge fund manager and investor best known for being the first to foresee and profit from the 2008 subprime mortgage crisis (Google AI).

... Michael Burry says AI started on the wrong path and is stuck there...

His case is that AI development went language-first when it should have gone reasoning-first, and the industry has been paying for that choice ever since without fully admitting it.

He builds the argument around something called Ballard's Test, a philosophical case involving a figure named Melville Ballard who achieved profound reasoning before ever acquiring language.

Burry uses it to make a specific point: real understanding doesn't require language. Language is the output of intelligence, not the source of it.

"We have mistaken the output of artificial intelligence (language) for the engine of it (reason),".

His reading of the AI industry is that it spotted language as a tractable problem and optimized for it, not because language led to general intelligence but because it was scalable and fundable.

The models got better at generating text. Investors rewarded that. The industry kept going. And somewhere along the way, the difference between producing language and actually reasoning got lost...

Burry's argument is that scaling language doesn't solve the underlying reasoning problem. It just makes the simulation more convincing.

That has real financial consequences. The companies spending hundreds of billions on AI infrastructure are betting that scaling gets you there. Hyperscaler AI spending could hit US$725 billion in 2026, according to TheStreet ...

 

[marcus]

From https://rogermontgomery.com/144-year-old-mystery-exposes-an-ai-bubble/
Title : 144-year-old mystery exposes an AI bubble
Market commentary, Technology & Telecommunications , March 2026

... Michael Burry recently turned to an article entitled Thought without Language, The Narrative of a Deaf-Mute, His First Thoughts and Experiences, in the June 19, 1880, edition of the New York Times.

“The case study is of a teacher at the Columbia Institute for the Instruction of the Deaf and Dumb. This particular teacher, Melville Ballard, was also a deaf mute and a graduate of the National Deaf Mute College.” ...

The 144-year-old story about Melville Ballard is one of a deaf-mute child who, despite having no access to formal language, engaged in profound metaphysical reasoning. Ballard contemplated the origins of the universe, rejected the idea of humans originating from tree stumps as “absurd,” and deduced the mechanics of the solar system through pure observation.

The insight from this story is that complex thought exists in the silence before words. As Professor Samuel Porter argued in 1880, the capacity for reason is the foundation; language is merely the tool that unlocks and scales it.

Burry argues that modern Large Language Models (LLMs) are fundamentally flawed because they reverse this natural order. By putting language first, we aren’t building intelligence; we are building an “increasingly sophisticated mirror.”

There’s merit in that. How do LLMs deliver answers to your prompts? They scour the universe of human-written material – material first generated by human reasoning – and regurgitate it, simulating reason through logical inference.

 

[pantaiema]

From https://rogermontgomery.com/144-year-old-mystery-exposes-an-ai-bubble/
Title : 144-year-old mystery exposes an AI bubble
Market commentary, Technology & Telecommunications , March 2026

... Michael Burry recently turned to an article entitled Thought without Language, The Narrative of a Deaf-Mute, His First Thoughts and Experiences, in the June 19, 1880, edition of the New York Times.

“The case study is of a teacher at the Columbia Institute for the Instruction of the Deaf and Dumb. This particular teacher, Melville Ballard, was also a deaf mute and a graduate of the National Deaf Mute College.” ...

The 144-year-old story about Melville Ballard is one of a deaf-mute child who, despite having no access to formal language, engaged in profound metaphysical reasoning. Ballard contemplated the origins of the universe, rejected the idea of humans originating from tree stumps as “absurd,” and deduced the mechanics of the solar system through pure observation.

The insight from this story is that complex thought exists in the silence before words. As Professor Samuel Porter argued in 1880, the capacity for reason is the foundation; language is merely the tool that unlocks and scales it.

Burry argues that modern Large Language Models (LLMs) are fundamentally flawed because they reverse this natural order. By putting language first, we aren’t building intelligence; we are building an “increasingly sophisticated mirror.”

There’s merit in that. How do LLMs deliver answers to your prompts? They scour the universe of human-written material – material first generated by human reasoning – and regurgitate it, simulating reason through logical inference.

Michael Burry has a long standing trackrecord in making money by shorting the stocks and other type of assets. He is a career shortseller

This is the other side of the argument from Blackrock CEO Inc Larry Fink on CNBC.
Blackrock is the largest asset manager in the world looking into the value of Assets Under Management (AUM)

Memory chips demand might be cyclical, but the demand for more and faster computing power will keep increasing, also pay attention to what he said about the electrical Power demand,

But when it comes to investing with your own money, people should always need to do their own research and make up their own decision.