Michael Burry believes the AI bubble may burst sooner — CNBC
Investor Michael Burry, known for betting against the US housing market ahead of the 2007–2009 global financial crisis, has shortened the time horizon of his bearish forecast for the artificial intelligence boom. As CNBC Top News reports, he is replacing short positions in a number of technology companies with put options.
In his investment newsletter, Burry wrote that he is “fundamentally” moving forward his expected timeline for developments. According to him, a shorter horizon makes the use of leverage more acceptable, while put options are relatively cheap due to low volatility readings, including the VIX.
Put options on technology companies
Burry said he partly changed the structure of his positions to reduce tax liabilities. At the same time, he named his belief that “the AI bubble may burst sooner rather than later” as the main reason. In CNBC’s view, his new positions, dominated by put options, indicate that the situation in AI-related stocks could change as early as next summer.
The investor replaced his short position in Micron with put options expiring in June and carrying a strike price in the roughly $500 range. He also converted his short position in Nebius into put options with a June expiration and a strike price in the double-digit range. Burry replaced his short position in the iShares Semiconductor ETF, traded under the ticker SOXX, with put options expiring in September 2027 and carrying a strike price in the low-$400 range.
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Arguments on the risks of the AI boom
Regarding Palantir, Burry said he replaced and rolled over his short position and existing put options into a larger position in put options expiring in September 2027 and carrying a strike price in the low-$100 range.
Burry referred to research by Ares Management, which discusses the risks of the AI boom’s dependence on unverified revenues and the assumption of sustained capital spending on artificial intelligence. The report noted that one period in which AI revenues fail to justify the capital investments on which calculations were based could be enough to change companies’ approach.
Earlier this month, Burry had already increased his short positions in Micron, Nebius and SOXX. In May, he compared the state of the stock market with the final months of the 1999–2000 bubble. At the same time, the Nasdaq Composite closed at a record level last week, while Micron and Palantir shares remained about 16% and 10%, respectively, below their all-time highs.
