Dan Niles: The Bubble Is Going to Blow Up — It's Only a Question of When

Hedge fund legend Dan Niles of Niles Investment Management sits down with Sheraz Ali of Stock Sharks for a wide-ranging conversation on where the market actually is right now. Dan called the June AI speed bump two days before chip stocks rolled over. Here he lays out why he thinks the bubble is going to blow up, why he's still buying anyway, and why he sees a 50% drawdown coming in the semiconductor index before this AI cycle busts.

We get into why today looks like 1997 and not 1999, why the model layer gets commoditized as AI gets cheaper, the OpenAI vs Anthropic battle and why he thinks Microsoft eventually buys the rest of OpenAI, plus his take on Elon's empire across Tesla and SpaceX.

Then we go macro. Interest rates with the Fed on hold, the national debt time bomb, why he thinks Bitcoin gets nailed, and the COVID stimulus that manipulated the market higher. Dan has been through it before, the dot com collapse and the 2008 crisis with his fund housed inside Lehman the week it failed, and he carries the scars to prove it.

He also opens up on the story behind it all. The $50 Merrill Lynch account he opened in college. The talking teddy bear stock that went bankrupt over Christmas. Walking away from designing chips for Wall Street. And shorting Facebook the moment it went public.

Make sure to follow Dan on Twitter @danieltniles

Research coverage and general market commentary for informational purposes only. Not investment advice.


Chapters:
0:00 The bubble is going to blow up
0:20 Born in Sri Lanka, growing up in Boston
1:13 The girl he threatened to drown (now his wife)
2:05 The $50 Merrill Lynch account
4:06 First stock, then Worlds of Wonder goes bankrupt
6:50 The Peter Lynch influence
7:31 Lehman seeds his fund in 2004
7:58 Inside Lehman when it collapsed
9:46 How you judge a manager in a downcycle
11:06 Why today looks like 1997, not 1999
12:27 The 50% semiconductor drawdown he's calling
13:38 Training vs inference and the compute story
14:47 Why optical is next year's trade
15:48 The three vectors: who's actually spending on AI
16:59 The hyperscalers driving everything
17:46 Why Google got hammered on CapEx
18:45 The AI leaders: from Google to OpenAI to DeepSeek
19:38 Why the model layer gets commoditized
21:06 The tools he actually uses
23:08 Where Sam Altman screwed up
24:45 Why Anthropic is hard to dislodge
25:31 Microsoft buying out the rest of OpenAI
27:32 Amazon fell 95% and survived
28:22 Elon: the Da Vinci of our time
30:05 SpaceX after the IPO pop
30:57 Why he likes Tesla better
32:37 Valuations matter: the 2000 Amazon lesson
33:45 The AI shakeout is coming
34:23 Why he thinks it busts next year
36:00 Middle East, oil and the midterms
37:35 Interest rates and why debt matters
39:24 The top 5 stock picks and cutting losses
42:42 GameStop and the short squeeze he didn't see
45:31 Why shorting is so dangerous
46:59 His best short ever: Facebook
48:44 The Chinese memory IPO
49:41 Software after the AI selloff
54:07 Where the software spend gets cut
57:04 How seriously to take China
1:02:03 The national debt time bomb
1:03:50 Bitcoin is going to get nailed
1:05:47 The IPO year and shorting new listings
1:06:53 How COVID stimulus manipulated the market higher
1:08:26 The scars left over from Lehman
1:09:31 The book that shaped him
1:10:42 His favorite company and stock
1:11:41 Why Intel and the microprocessor vendors
1:12:51 China, Taiwan and the TSMC risk
1:74:07 How far behind America really is
1:16:25 Advice for getting into finance today
1:17:40 The man who gave him his shot