‘The Big Short’ investor Michael Burry is increasing his bets against AI infrastructure boom, shorting more shares of Oracle (ORCL), Micron Technology (MU), and Nebius Group (NBIS). He predicts a glut in AI computing power by 2028.
Burry disclosed on Substack that he added to his short positions at approximately $247 for Nebius, around $924 for Micron, and near $152 for Oracle. He also increased his holdings of puts on the iShares Semiconductor ETF (SOXX) expiring in March 2027. Earlier this month, Burry first shorted Nebius at $211.77, describing the trade as having a "bit of a fish-in-a-barrel feel."
Key Argument: Debt Sets a Timeline for the AI Boom
Burry argues that a circular financing model funnels capital into the AI ecosystem, which then flows back to industry participants as revenue, with debt representing a growing portion of this flow. He believes this dynamic "sets a countdown to the bust" for the bubble. The current landscape reminds him of the 2000 dot-com bubble, where many tech companies relied on mutual transactions to drive revenue growth. Burry's base case scenario is a severe oversupply of computing power by 2028, noting that historical patterns suggest markets often react before the official inflection point arrives.
Why Nebius Signals a Peak for AI Market
Driven by clients scrambling for scarce AI computing resources, Nebius reported a 454% year-over-year revenue increase this week. The company's benchmark long-term contract pricing is between $20 million and $25 million per megawatt, while short-term contracts can fetch $40 million to $50 million. However, Burry sees this as a classic sign of a market nearing its peak: clients are currently paying a premium for tight capacity, while forward pricing for computing power is significantly lower. He suggests this steep price gap indicates that the value of GPUs, end customers, or both could rapidly decline.
Shorting Oracle and Micron: Betting on the Entire AI Infrastructure Chain
Oracle has made massive investments in AI infrastructure, but its free cash flow has turned negative. According to reports, S&P Global Ratings downgraded Oracle's credit rating to BBB- in July, just one notch above junk status. The company's forward data center lease commitments have surged to approximately $260 billion. Oracle also forecasts capital expenditures of up to $95 billion in fiscal year 2027. Burry worries that if AI computing power shifts from scarcity to oversupply and returns on investment decline, these massive capital outlays will be difficult to recoup.
Burry is also directly shorting Micron Technology, a major beneficiary of the AI storage cycle. He first established a short position near $1,052 in July and added to it around $924. Simultaneously, he bought puts on SOXX, extending his bearish stance across the entire semiconductor sector.
Prediction Market Traders Don't See a Crash Imminent
Participants in the Polymarket prediction market generally do not believe the AI industry will face a deep downturn this year. Trading data shows only a 15% probability of a severe recession occurring before the end of 2026. For Burry, the core debate is not whether current AI demand is strong; it is that once the present supply shortage eases, the scale of new industry capacity will far exceed the demand that can be profitably absorbed.
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