The Zhitong Finance App learned that Michael Burry is shifting the bearish schedule for artificial intelligence (AI) forward. This investor, famous for drastically shorting the US real estate market before the global financial crisis, is now replacing short positions heavily on AI targets with put options in order to obtain more cost-effective leverage in a shorter time window.
In an investment newsletter released on Monday, Burry wrote, “Fundamentally, I'm moving my schedule forward. As a result, I would like more leverage for short positions. When the time window is more in line with expectations, the risk of leverage is more bearable. When it comes to leverage, nothing is more appropriate than options—put options in particular; due to abnormally low volatility indicators such as VIX, these options are relatively inexpensive.”
He revealed that some of the position adjustments are aimed at reducing the tax burden, but the main reason is that he believes “the AI bubble may burst sooner than expected.” The new put option position means he is betting that AI trading may reverse before next summer.
Specifically, Burry exchanged the short position of Micron Technology (MU.US) for a put option that expires in June and has an exercise price in the $500 range; Nebius (NBIS.US)'s short position was exchanged for a double-digit bearish option that expires in June. He also traded the semiconductor ETF-iShares (SOXX.US) short position for a put option due in September 2027 with an exercise price slightly above $400.
Furthermore, he replaced and rolled short and put options on Palantir (PLTR.US) into larger put options, which expired in September 2027, and the exercise price was in the early $100 range.
Burry cites recent research from Ares Management, which highlights the risk of the AI industry relying on unproven revenue, and that revenue is often subject to strict legal agreements.
Ares reports: “To break through it all, it only takes a quarter: AI revenue has failed to meet the expectations that underpin its capital expenses. At that point, the board of directors of a few companies — which already tend to reallocate capital to the most confident bet — only need to decide that the most confident bet has been transferred. Legal documents have long left room for this kind of decision.”
Burry's latest position adjustment shows that his bearish sentiment about the AI sector continues to heat up. Previously, he had added shorts against Micron, Nebius, and SOXX. He also quoted the views of Acer CEO Jason Chen (Jason Chen). Chen Junsheng believes that as China's production capacity continues to increase, the cyclical market in the memory chip industry will return.
“How is it possible that supply will continue to be in short supply? China's production capacity has been increasing, and there is no shortage at all. Contract prices are currently fluctuating at a high level. Prices for some varieties are rising, while others are falling.”
Burry has maintained a bearish stance since this year, but the market has not cooperated. In May, he said that the current stock market atmosphere “is like the last period of the 1999-2000 internet bubble.” The Nasdaq Composite Index closed at a record level last week. However, many technology stocks are far from their highs: Micron is 16% below the record high, and Palantir is about 10% below the all-time high.