Michael Burry, the investor known for predicting the U.S. subprime crash, has issued his bluntest warning yet on AI stocks, writing that the bubble may burst sooner than later. He has also shifted several of his bearish positions from short sales to put options with set expiration dates and strike prices.
Michael Burry, who made $700 million for clients by betting against the U.S. housing market before its collapse, has sharpened his warning on artificial intelligence stocks. He no longer runs a hedge fund, having deregistered his firm Scion Asset Management with regulators last year, but he continues to invest and share his views through a newsletter.
Burry says the AI bubble may burst "sooner than later"
Burry has been bearish on AI stocks for well over a year, betting against names including Nvidia and Micron Technology. According to CNBC: "The bubble in AI may burst sooner than later", he wrote in his newsletter on Monday. He cited a report by Ares Management that said the AI boom depends on the assumption that AI capital spending will continue at high levels.
From short positions to put options
Burry has shifted from short positions to put options in several AI-related names, a move that could produce larger gains over a shorter timeline. Per the CNBC report, he dropped his Micron short for puts with a June expiration and a strike price around $500. He also swapped his Nebius short for puts with a June expiration and a "double-digit strike price".
He also swapped his iShares Semiconductor ETF short for puts expiring next September with a price around $400. And he shifted his Palantir short and existing put into a larger put position with a September 2027 expiry and a price of about $100.
What the moves signal for investors
The S&P 500 has climbed for the past three calendar years, led largely by companies tied to the AI space. Burry's shift suggests he still expects a decline in AI stocks, but is now positioning for it to happen within a defined window rather than over an open-ended timeframe.
Source: The Motley Fool
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