Michael Burry Moves Up AI Bubble Timeline, Replaces Shorts With Put Options

Burry, known for his big short on the U.S. housing market before the 2007-2009 global financial crisis, said he is fundamentally moving timelines up. “As such, I want more leverage in my short positions. Better timelines make leverage more palatable,” he wrote. “Nothing says leverage like options, in this case put options, which are relatively cheap due to exceptionally tight volatility measures such as the VIX.” He said some moves were intended to reduce his tax liability, but most were because he thinks “the bubble in AI may burst sooner than later.”

The newsletter detailed several position changes. Burry swapped his Micron short with puts at a June expiration date and a $500 strike price range. He swapped his Nebius short with puts at the June expiration in the “double digit strike price” range. He replaced his SOXX iShares Semiconductor ETF short position with September 2027 puts “in the low $400s.” He also “replaced and rolled the Palantir short and put position into an enlarged put position” centered at a September 2027 expiration in the low $100s.

Burry cited recent research from Ares Management that emphasized the precarity of relying on unproven revenues in the AI space, structured with demanding legal agreements. “It would take only a season in which AI revenue disappoints the capital expenditure underwriting it. In that scenario, a handful of boards, predisposed to redeploy capital toward the highest-conviction bet, would simply need to conclude that the highest-conviction bet has shifted. The legal documents contemplate that decision,” the Ares report said.

He also cited Acer CEO Jason Chen, who told a Taiwanese media outlet that cyclicality was due to return to the memory chip sector because of increasing Chinese production capacity. “How could there be a continuous shortage? China’s production capacity has been consistently increasing, and there is absolutely no shortage issue. Contract prices are currently fluctuating at a high level, with some prices going up and others down,” Chen was quoted as saying.

Burry’s latest moves imply he is growing increasingly bearish on the AI trade. Earlier this month he had increased his shorts on Micron, Nebius and the SOXX. He has been bearish for a while this year, but stocks have continued to march to new highs. Burry said in May that equities were “feeling like the last months of the 1999-2000 bubble.” The Nasdaq Composite closed at a record last week. Still, many tech shares are well off their highs. Micron is 16% below its record level, while Palantir is about 10% below its all-time high.