Michael Burry Accelerates Bearish AI Stance, Swapping Shorts for Leveraged Put Options

Investor Michael Burry is accelerating the timeline for his bearish thesis on artificial intelligence, transitioning from direct equity short sales to leveraged put options on key technology companies, according to reporting by CNBC Business (https://www.cnbc.com/2026/09/28/michael-burry-believes-the-ai-bubble-may-burst-sooner-than-he-first-believed.html). Burry, known for his prominent short bet against the U.S. subprime housing market before the 2007–2009 financial crisis, noted that the change is designed to secure more cost-effective downside leverage over a shortened time horizon.

In his Monday investment newsletter, Burry outlined the rationale behind replacing standard short positions with derivatives. "Fundamentally, I am moving timelines up," Burry wrote. "As such, I want more leverage in my short positions. Better timelines make leverage more palatable. Nothing says leverage like options, in this case put options, which are relatively cheap due to exceptionally tight volatility measures such as the VIX." While Burry acknowledged that part of the repositioning was executed to mitigate tax liability, he noted that the primary driver is his expectation that "the bubble in AI may burst sooner than later."

The portfolio adjustments involve specific equity and index contracts. Burry swapped his direct short position in Micron for put options with a June expiration date and a strike price in the $500 range. He similarly replaced his short position in Nebius with June-expiration puts in the double-digit strike price range. In addition, Burry exited his short position in the iShares Semiconductor ETF (SOXX) in favor of September 2027 puts in the low $400s.

For Palantir Technologies, Burry replaced and rolled his short position and existing puts into an enlarged put position expiring in September 2027 with strike prices centered in the low $100s. The concentration of revised options positions suggests an expectation that the broader AI trade could see a significant reversal by next summer.

To support his outlook, Burry cited recent research from Ares Management warning of the fragility of unproven revenues underpinning aggressive AI capital expenditures. "It would take only a season in which AI revenue disappoints the capital expenditure underwriting it. In that scenario, a handful of boards, predisposed to redeploy capital toward the highest-conviction bet, would simply need to conclude that the highest-conviction bet has shifted. The legal documents contemplate that decision," the Ares report states.

Burry also highlighted comments from Acer CEO Jason Chen, who told Taiwanese media that cyclicality is returning to the memory chip sector due to expanding Chinese manufacturing capacity. "How could there be a continuous shortage? China's production capacity has been consistently increasing, and there is absolutely no shortage issue. Contract prices are currently fluctuating at a high level, with some prices going up and others down," Chen was quoted as saying.

The options purchases follow earlier bearish moves by Burry, who had increased his short positions in Micron, Nebius, and the SOXX ETF earlier in the month. He has expressed caution throughout the year, remarking in May that equities were "feeling like the last months of the 1999-2000 bubble." While the Nasdaq Composite closed at a record high last week, select technology stocks have diverged from their peaks, with Micron trading 16% below its record level and Palantir sitting roughly 10% below its all-time high.