As part of his ongoing strategy of betting against the artificial intelligence (AI)-involved technology sector, the legendary ‘Big Short’ trader Michael Burry unveiled two new positions in an August 6 Substack post.
Specifically, the famous investor disclosed he is now wagering on both Oracle (NASDAQ: ORCL) and Nebius (NASDAQ: NBIS) stock crashing.
Notably, Burry previously removed his short position against ORCL shares and assumed the current one at $144.63. Additionally, he revealed that his bet against NBIS stock was a direct equity short at $211.77, citing put options being ‘exorbitantly’ priced.
At press time on August 7, Oracle is trading at $144.65 following a 0.64% regular session drop and an extended session 0.82% climb, and Nebius is at $198 after falling 13.29% during the day and a 4.28% rally overnight.
Why Michael Burry is shorting AI companies
Simultaneously, the latest short positions are consistent with Michael Burry’s estimate that the current state of the stock market is unsustainable and his warning that the market might be at its top and at risk of ‘a 1987-type fall.’
Indeed, the ‘Big Short’ trader recently made an X post in which he revealed that, while he believes current trends justify the hype, he estimates that the AI ‘boom’ is bound to leave numerous ‘ghost towns‘ – that after the current frenzy is over, numerous companies will find themselves severely distressed.
Under the circumstances, both ORCL stock and NBIS shares appear logical targets.
Indeed, Oracle has vast data center agreements with OpenAI in the form of its commitments to the Stargate project. The firm’s issue is that the scale of the buildout exceeds its wealth, meaning it is highly dependent on Sam Altman’s company actually having sufficient funds to pay on schedule.
Leaked OpenAI financials for 2024 and 2025 cast doubt on its ability to do so, and Oracle itself faced an S&P Global credit rating downgrade in July.
Nebius is similarly a high-risk, high-reward play considering that its neocloud business holds vast potential should the AI ‘boom’ play out as many executives and analysts are expecting, but is, for the time being, deeply unprofitable.
Why Burry’s Oracle and Nebius shorts are also a bet against Nvidia stock
Finally, both companies Michael Burry is shorting recently received an additional layer of security as Nvidia (NASDAQ: NVDA) built a $2 billion strategic investment in NBIS and recently started negotiating a $250 billion backstop to OpenAI.
On the flip side, the developments arguably have a bearish edge as well, considering they exacerbated concerns over circular financing in AI and arguably further exposed the world’s biggest company to potential sector instability.
Michael Burry also has a short position against NVDA stock.
