Key points
- Burry replaces AI stock shorts with puts
- He's moved his timeline up from 2028
- Micron reported two days after his post
Michael Burry has replaced his short positions in Nvidia (NVDA), Micron (MU), and Palantir (PLTR) with put options, betting that the AI bubble bursts within the next year. "As of today, put options completely replaced my short positions," the investor of "The Big Short" fame wrote in a Substack post on Monday.
Burry was already short all three stocks, so the bets themselves aren't new. The timing is. "Fundamentally, I am moving timelines up," he wrote. "As such, I want more leverage in my short positions."
What did Burry buy?
A put gives its owner the right to sell a stock at a specified price by its expiration date. Its value can rise as the stock falls, but the buyer can lose the entire premium if the option expires worthless.
Burry's Nvidia puts expire in September 2027 at strikes in the mid-$100s, according to Stocktwits' summary of the post. Nvidia closed Wednesday at $228.38, so those strikes sit roughly a third lower. His Palantir puts, also September 2027, are struck in the low $100s, against Wednesday's close of $187.05.
The Micron puts expire in June 2027 at strikes around $500, roughly half Wednesday's closing share price of $1,065.11.
He made the same switch in Nebius (NBIS), Oracle (ORCL), Caterpillar (CAT), and the iShares Semiconductor ETF. He covered his CoreWeave short but hadn't found puts at an attractive price. His Nasdaq 100 puts expire next September and have strikes in the 24,000s, about 20% below the index's Wednesday close of 30,408.50.
Why did he move his timeline up?
Burry said some of the trading was for tax-loss harvesting, but the "majority of it was motivated by research this past weekend." That research convinced him "the bubble in AI may burst sooner than later."
He had previously called 2028 his base case. Now he's "more confident than ever before" his thesis will "play out over the next year," Business Insider reported. His argument is about financing. "If the spending stops or slows, it all comes apart," he wrote, adding that the money is "increasingly debt, with strings attached."
Last week, he argued that the biggest cloud companies depreciate their AI chips over too many years.
What has Micron reported since?
Two days after the post, Micron reported fiscal fourth-quarter revenue of $54.2 billion and said its customer agreements carry about $150 billion in contracted future revenue. Chief Executive Sanjay Mehrotra said Micron doesn't have "line of sight to when supply and demand will return to balance."
Burry first shorted Micron on July 2, when the stock was at $1,052. We tracked how that bet and his others have done in our guide to his positions.
