Michael Burry shifts bearish AI bets to options as he warns of 2027 market reckoning

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Burry shifts bearish AI bets

Highlights

Michael Burry has shifted from outright short positions to bearish put options on Nvidia, Palantir, Micron, Oracle, Caterpillar, and the Nasdaq 100, with expiries from June to December 2025.
Burry's Nasdaq 100 puts are struck in the $24,000s and expire in September 2025, implying he expects nearly a 20% decline from current levels around $30,300.
Burry warns that unsustainable data center spending, rising debt, and higher interest rates threaten AI-linked companies, with financing pressures growing among hyperscalers and insurers.

Bearish options strategy targets AI-linked stocks

As first reported by Business Insider, Burry said in a Monday Substack post that he has replaced outright short positions with bearish put options to gain more leverage as he anticipates the AI bubble may burst sooner than expected.

He said the revised strategy covers Nvidia, Palantir, Micron, Nebius, Oracle, Caterpillar, the iShares Semiconductor ETF and the Nasdaq 100, with expiries ranging from June to December next year. Burry also said he has closed his short position in CoreWeave and plans to buy puts when pricing becomes more attractive, while adding new puts on MetLife.

Burry shared details of several positions, including Nvidia puts expiring next September with strike prices in the mid-$100s, well below the chipmaker's Monday closing price of $229. He also said his Nasdaq 100 puts are struck in the $24,000s and expire next September, implying he expects the tech-heavy index to fall by nearly 20% from around $30,300 within the next year.

Debt, rates and data center spending drive risks

Burry argues that AI companies are borrowing and spending at an unsustainable pace to build data centers needed to support the technology. He said the investment chain becomes vulnerable if spending slows, because an increasing share of the cash funding the buildout comes from debt.

He also warns that higher interest rates could intensify pressure across the sector, saying private equity, private credit and insurers are financing much of the infrastructure expansion. In another recent post, he said there are signs of strain among major hyperscalers and that public comments and company filings suggest growing stress beneath the surface.

Burry has repeatedly warned that enthusiasm around AI is masking slower growth, excessive capital spending and financing arrangements that could unravel if market conditions worsen. Even so, stocks continue to look past those concerns, as well as geopolitical tensions, higher rates, elevated bond yields and renewed inflation risks.

In our earlier coverage of rising bond yields and the AI trade, we noted that investors were rethinking whether the AI boom can keep supporting stretched valuations as rates stay higher for longer. We also highlighted fresh disclosures from major AI players pointing to massive data-center and cloud infrastructure spending alongside growing safety and policy concerns—factors that could amplify volatility as earnings approach.

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