Michael Burry has swapped several of his short positions on AI-linked stocks for put options, saying the move gives him cheaper leverage over a shorter time horizon. The investor cited a new Ares Management report on AI capital spending and said he now believes the AI bubble could burst sooner than he previously thought.
Michael Burry is shortening his timeline for a downturn in artificial intelligence stocks. The investor, known for his bet against the U.S. housing market before the 2007-2009 financial crisis, is switching from short positions to put options on several AI-linked names, he wrote in his Monday investment newsletter.
Burry swaps shorts for shorter-dated puts
Burry said the change gives him more cost-effective leverage because options are relatively cheap right now, with volatility measures such as the VIX sitting at tight levels. He swapped his Micron short for puts at a June expiration with a $500 strike price range, and replaced his Nebius short position with June puts in the "double digit strike price" range. He also rolled his SOXX iShares Semiconductor ETF short into September 2027 puts in the low $400s, and enlarged his Palantir put position around a September 2027 expiration in the low $100s.
Some of the moves were meant to reduce his tax liability, Burry said, but he added he thinks "the bubble in AI may burst sooner than later." His new put-heavy positions suggest he expects the AI trade could turn by next summer.
Ares report flags AI capital-spending risk
Burry pointed to recent research from Ares Management that examined how the AI boom relies on unproven revenue supporting demanding legal agreements tied to capital spending. The report warned that a single season of disappointing AI revenue against that spending could prompt boards to redeploy capital elsewhere. He also cited Acer CEO Jason Chen, who told a Taiwanese outlet that cyclicality was due to return to the memory chip sector as Chinese production capacity keeps increasing.
Stocks still near record highs
Burry has held a bearish view for months even as equities kept climbing. He said in May that markets felt like the last months of the 1999-2000 bubble. Meanwhile, the Nasdaq Composite closed at a record last week. Still, Micron trades about 16% below its record level, while Palantir sits roughly 10% below its all-time high.
Source: CNBC
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