Michael Burry has shifted from short positions to buying put options on key AI stocks, including June-expiring puts on Micron in the $500 strike range and similar bets on Nebius, plus longer-dated puts on SOXX and Palantir. He said he is moving his timelines up and warned that a single disappointing AI revenue season could trigger board realignments, suggesting the AI bubble may burst sooner than expected.
What Happened
Michael Burry wrote in his Monday investment newsletter that he is moving up the timeline for his bearish thesis on the AI boom, and that he wants more leverage in his short positions as a result. “Fundamentally, I am moving timelines up,” he 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.” He said some of the moves were intended to reduce his tax liability, but that most were driven by his view that “the bubble in AI may burst sooner than later.”
Burry swapped his Micron short for June-expiring puts in the $500 strike range, and swapped his Nebius short for June-expiring puts in the “double digit strike price” range. He replaced his SOXX iShares Semiconductor ETF short with September 2027 puts “in the low $400s,” and “replaced and rolled the Palantir short and put position into an enlarged put position” centered at a September 2027 expiration in the low $100s. The new put-heavy positions imply the AI trade could flip by next summer.
He cited research from Ares Management that emphasized the precarity of relying on unproven revenues in the AI space, structured with demanding legal agreements. “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 says.
Earlier this month, Burry had already increased his shorts on Micron, Nebius, and SOXX, reflecting growing skepticism about the sector’s valuation.
What This Means For You
For investors holding exposure to Micron, Nebius, or semiconductor ETFs, Burry’s pivot points to a shorter risk window for AI stocks, making it worth reconsidering the duration of those positions. The June expirations he chose suggest he expects pressure within months rather than years if AI demand falters.
For traders, the use of put options offers a cost-efficient way to hedge. Because options are priced cheaply when volatility measures such as the VIX are low, leverage can be gained without committing large capital to short sales.
For startup or venture investors, Burry’s stance underscores the importance of robust revenue models. The Ares report highlights that a single disappointing revenue season could trigger board realignments, so funding agreements may benefit from performance milestones tied to realistic cash flow projections.
Upcoming earnings are worth watching, since guidance from companies such as Micron and Nebius could validate or refute the bearish thesis. A cut in AI-related capital expenditure could signal a shift in board priorities.
For those in corporate finance, the long-dated September 2027 puts on SOXX suggest a longer-term view: if a firm is considering a strategic shift toward AI, market sentiment could sour well before 2027, affecting valuation multiples.
Why It Matters
The move points to a broader reevaluation of AI’s growth trajectory. The sector has been buoyed by hype and lofty revenue projections; a premature burst could ripple through supply chains, from chip makers to data-center operators.
It also illustrates how options can be used for tactical exposure: by tightening timelines, Burry is effectively betting on a near-term correction, a strategy that may become more common while volatility remains low.
The shift also highlights the fragility of AI valuations that rely on unverified revenue streams. If boards reassess capital allocation, a wave of divestitures or strategic pivots could reshape the industry landscape.
Key Takeaway
- Burry has moved from shorts to put options, tightening his bearish timeline on AI stocks.
- Key positions: June puts on Micron ($500 strike), Nebius (double-digit strike), September 2027 puts on SOXX (low $400 strike), and Palantir (low $100 strike).
- The Ares report warns that a single disappointing AI revenue season could trigger board realignments.
- Investors may want to hedge with cheap puts and monitor upcoming earnings for signs supporting or refuting the bearish thesis.
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