DeepTech Summary: With the Nasdaq hitting new all-time highs and Nvidia's market cap approaching $5.3 trillion, Michael Burry, who rose to fame by shorting subprime mortgages during the 2008 financial crisis and was the inspiration for the movie "The Big Short," is now doubling down in the opposite direction.
He is not only maintaining his bearish bets on Nvidia and Palantir but is also expanding his short positions to include a semiconductor ETF and a Nasdaq ETF, while buying into traditional software stocks that have been suppressed by the AI narrative, creating a complete "AI Bubble Repricing" portfolio.
The Nasdaq index has continuously hit new all-time highs this week, closing at around 26,247 on May 8, with the S&P 500 also reaching a high on the same day. The Philadelphia Semiconductor Index has risen by about 55% since the second quarter began, Nvidia's stock price is approaching its all-time high of $217.80, and its market cap has surpassed $5.2 trillion. The frenzy of AI-driven tech stocks is currently at its peak.
However, at the most euphoric moment in the market, an investor known for contrarian bets is significantly increasing his positions in the opposite direction.
According to Foreign Policy Journal's report on May 7, hedge fund manager Michael Burry, who was portrayed in the movie "The Big Short" for predicting the 2008 mortgage crisis, revealed his latest position adjustments in his Substack newsletter "Cassandra Unchained" this week:
He is not only maintaining bearish options positions on Nvidia and Palantir but has also added a direct short position on Palantir and expanded his bearish bets to include the Semiconductor ETF (SOXX), the Nasdaq 100 ETF (QQQ), and Oracle.
At the same time, he has started buying a group of traditional software companies that have been marginalized by the AI hype, such as Adobe, Autodesk, Salesforce, and Veeva Systems, with the rationale that the decline in their stock prices is due to panic selling rather than fundamental deterioration.
Thus, a complete big short hedge portfolio has emerged, with the core logic being to short AI beneficiaries and long AI victims.
Starting from the $1.1 Billion Bet in November Last Year
Burry's shorting of the AI sector began in the third quarter of 2025.
At that time, his hedge fund, Scion Asset Management, disclosed in its 13F filing that he purchased about $9.12 billion in notional value of put options on Palantir and about $1.87 billion in notional value of put options on NVIDIA. This news, announced in November last year, caused a market shock, with Palantir and NVIDIA's stock prices coming under pressure.
However, Burry later clarified on X platform that his actual capital deployed was around $9.2 million, not the widely reported $9.12 billion—the latter being the notional value of the options contracts, with the two figures differing by nearly a hundredfold. This detail is crucial: the notional value in the 13F filing is often misinterpreted as the actual capital invested, thereby exaggerating the size of the trades.
Shortly after the disclosure, Burry announced the closure of Scion Asset Management and the deregistration with the SEC, ending his career managing outside capital.
He then transitioned to becoming a personal investor, and under the name of "Cassandra Unchained" on Substack, he launched a column (Cassandra being the prophetess in Greek mythology who spoke the truth but was not believed), continuing to publish market analysis.
Palantir Short Showing Results, Burry States "Not Dropped Enough Yet"
From the trading results, Burry's Palantir bet is currently in a profitable state. Palantir's stock price has dropped from around $161 when he entered to the current price of about $137, a cumulative drop of about 34% from the 52-week high of $207. Despite the company just releasing strong first-quarter 2026 earnings (with a revenue increase of 85% year-on-year), the stock price has seen a decline after the earnings report.
Burry has not yet closed his position for profit. According to his Substack disclosure, he currently holds put options expiring in December 2026 with a strike price of $100 and put options expiring in June 2027 with a strike price of $50, indicating his expectation that Palantir will drop over 60% from the current level within the next year.
He explicitly stated in the post that Palantir's fair valuation is only in the "single to double-digit low end."
In April of this year, Burry wrote on Substack that Anthropic is "eating Palantir's lunch," pointing out that the AI security company's revenue growth rate has exceeded $30 billion annualized and its more user-friendly, lower-cost AI integration tools are replacing Palantir's complex enterprise deployment solutions.
Following the post, Palantir's stock price fell by 13.7% within a week, after which Burry deleted the post. Wedbush analyst Dan Ives dismissed this view as a "fictional narrative," and Palantir CEO Alex Karp had previously publicly stated that he "didn't understand" Burry's short position.
NVIDIA Short Continues to Lose, But Burry Insists "AI is a Bubble"
In contrast to Palantir's success, Burry's situation with NVIDIA is quite different.
On May 8, NVIDIA's stock price closed at around $215, approaching its all-time high of $217.80, with a market capitalization of about $530 billion. It is reported that Burry holds NVIDIA put options with a strike price of $110, expiring in December 2027, which are currently deeply underwater. However, he has not reduced his position, but instead continued to add to it in a recent portfolio adjustment.
Burry's core logic for shorting NVIDIA is "AI infrastructure overbuilding." In his first Substack article in November of last year, he compared the current AI investment frenzy to the late 1990s Internet bubble, likening NVIDIA to the Cisco of that era. Cisco saw its stock price rise by 3,800% between 1995 and 2000, becoming the world's most valuable company at one point, only to plummet over 80% during the Internet bubble burst.
Burry's key points include: mega-scale customers like Microsoft, Google, Meta, Amazon, and Oracle are extending the depreciation life of GPUs to beautify their financial reports; he estimates that from 2026 to 2028, these accounting practices will cumulatively understate depreciation expenses by about $176 billion, inflating the industry's profits.
Furthermore, he believes that the massive capital expenditure on current AI infrastructure is based on overly optimistic demand forecasts, reminiscent of the frenzy of telecom companies laying fiber optic cables around 2000.
This view prompted a direct rebuttal from NVIDIA. According to CNBC, NVIDIA had privately circulated a seven-page memo to Wall Street analysts, addressing each of Burry's allegations, with particular reference to Burry's X Platform post as a source of contention.
In the memo, NVIDIA stated that it sets the depreciation period for its GPUs at four to six years based on real-world lifespan, and early products (such as the 2020 A100) continue to see high utilization rates to this day. Burry responded by saying, "I'm not saying NVIDIA is Enron," but he stood by his analysis.
Long Software Stocks Depressed by AI: A Complete Bubble Hedge Portfolio
Perhaps the most noteworthy aspect of Burry's portfolio adjustment is not the short positions themselves, but his long positions.
He recently bought stocks in Adobe, Autodesk, Salesforce, Veeva Systems, and MSCI, among others. These companies share a common trait: their business fundamentals remain strong, but their stock prices have plummeted significantly due to the market narrative of being "disrupted by AI" and forced selling by private credit funds.
Adobe is currently down about 30% from its 52-week high, Autodesk has seen a 22% decline year-to-date, and both companies' forward P/E ratios have fallen back to 2018-2019 levels.
Explaining on Substack, Burry said he does "not believe the technical selling from private credit and software debt has the legs to permanently impair these stocks." In other words, he believes the market has overly penalized companies labeled as "AI losers" and excessively hyped those labeled as "AI winners"—and he is betting on a correction of this mispricing.
Looking at both the short and long sides together, Burry has constructed a typical long-short hedge portfolio: If the AI bubble narrative bursts, high-valuation beneficiaries like NVIDIA and Palantir will be hit hardest, while unduly punished traditional software stocks are poised for a valuation recovery. Even in a general market downturn, this structure could potentially deliver positive returns.
In a letter to investors when closing Scion, Burry candidly admitted, "My assessment of security value has been out of line with the market for some time." This statement is both introspective and a reflection of his consistent stance.
At the peak of the AI frenzy, he chose to stand apart from the crowd.
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