Hedge Fund Manager Michael Burry Bets Against AI Leaders, Warns of 1987-Style Decline

Michael Burry, the investor best known for anticipating the U.S. housing collapse in the mid-2000s, has turned his attention to the artificial intelligence trade. In an August post on Substack, Burry reaffirmed short positions in AI-heavyweight names, including NVIDIA and Palantir, and floated the possibility of a market decline reminiscent of 1987.

Burry built his reputation by going against prevailing market sentiment. His early-2000s wagers against subprime mortgage exposure reportedly generated roughly $700 million for his clients and were later dramatized in the film The Big Short. His latest positioning targets the sector that has powered much of the broader market’s advance in recent years.

The stocks in his crosshairs have been central to the AI buildout. NVIDIA, which operates as a data center-scale AI infrastructure company across the Americas, Asia, and Europe, traded at $223.67 in recent action, down 0.73% from a prior close of $225.31, valuing the semiconductor giant at roughly $5.56 trillion.

Palantir, whose software platforms serve intelligence and counterterrorism customers in the U.S., U.K., and elsewhere, changed hands at $169.53, off 0.64% from its previous close of $170.62. That puts the infrastructure software company’s market capitalization near $407.4 billion.

Both names slipped modestly in the most recent session, though the daily moves were small relative to the scale of the positions Burry is described as taking. Shorting high-momentum leaders in a sector that has driven index gains carries well-documented timing risks, a dynamic that shaped Burry’s own earlier career — his housing call was famously early before it proved prescient.

Burry’s warning references October 1987, when equity markets fell sharply in a single session — an episode not driven by a single catalyst but by valuation anxiety and portfolio mechanics. Whether today’s AI concentration creates similar vulnerability remains a subject of active debate among market observers. The comparison underscores the stakes: AI-linked companies now account for a substantial share of large-cap index gains, meaning any broad repricing of the sector would ripple well beyond the stocks themselves.

For now, Burry’s disclosures represent one prominent investor’s view, not a consensus forecast. Short positions can be closed at any time, and quarterly filings often lag the trades they describe.

What to watch

• Upcoming quarterly earnings from NVIDIA and Palantir, including data center demand and government contract commentary
• Updated regulatory filings that would confirm whether Burry’s short positions remain in place
• Further commentary from Burry on Substack regarding his market outlook
• Any shifts in AI infrastructure spending guidance across the semiconductor and software sectors

Source: original release