Big Short Michael Burry Accelerates Bet on AI Crash: Bubble May Burst Sooner Than Expected

On September 29, Michael Burry, the prototype of "The Big Short," is advancing his judgment on the AI market shift by converting part of his direct short positions in Micron Technology, Nebius, Palantir, and the iShares Semiconductor ETF (SOXX) into put options to achieve higher leverage at a lower cost.

In his latest investment newsletter, Burry stated, "From a fundamental perspective, I am advancing the timeline, so I hope to increase the leverage of my short positions. When the timing judgment becomes clearer, using leverage is also more acceptable. Nothing reflects leverage better than options, and with current volatility indicators like the VIX being extremely low, put options are relatively cheap." He mentioned that part of the adjustment is aimed at reducing tax burdens, but the main reason is the belief that "the AI bubble may burst sooner or later." His current major position adjustments include:

• Replacing the short position in Micron Technology with put options expiring in June next year, with a strike price in the $500 range;
• Replacing the short position in Nebius with put options expiring in June next year, with a strike price in the double-digit range;
• Replacing the short position in SOXX with put options expiring in September 2027, with a strike price just above $400;
• Extending and expanding the existing short and put option positions in Palantir, focusing on put options expiring in September 2027, with a strike price just above $100.

He cited research from Ares Management, stating that the current AI investment boom relies on companies continuously increasing capital expenditures and AI revenues that have yet to be fully validated. If AI revenues fall short of expectations supporting related capital expenditures for just one quarter, some company boards may reallocate funds to other high-certainty projects, and existing legal agreements provide room for such adjustments.

In addition to AI commercial returns, Burry continues to be bearish on the memory chip cycle. He quoted Acer CEO Chen Junsheng's view that as China's memory chip production capacity continues to increase, the industry cannot maintain a supply shortage in the long term, and the memory market will eventually return to cyclical fluctuations.

Burry has been bearish on tech stocks this year, stating in May that the current market is similar to the last few months before the internet bubble burst in 1999 to 2000. However, U.S. stocks subsequently continued to reach new highs, with the Nasdaq Composite Index setting a new record last week; Micron and Palantir are currently down about 16% and 10%, respectively, from their historical highs.

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