Famous Investor Bets Against Rising Tech Stocks Warning of Imminent Bubble Burst

2026-10-07 economy

New York, Tuesday, 6 October 2026.
Michael Burry is increasing leveraged bets against artificial intelligence stocks, warning that circular tech spending masks severe valuation risks despite major market indexes reaching record highs.

Strategic Portfolio Restructuring

Michael Burry is increasing leveraged bets against artificial intelligence stocks, warning that circular tech spending masks severe valuation risks despite major market indexes reaching record highs [1]. Recent filings indicate Burry is liquidating key positions, including his top holding in Lululemon Athletica, while taking an increasingly bearish posture on benchmark indexes like the S&P 500 and Nasdaq [1]. Burry stated he has sold his Lululemon shares and swapped them for Deckers Outdoors to claim a tax benefit [2]. He plans to buy back Lululemon in a month after Internal Revenue Service 30-day wash-trading restrictions expire [2]. Wall Street analysts remain pessimistic on Lululemon, with 27 out of 37 ratings tracked by FactSet marking it as a hold [2]. The stock trades at just 11 times the projected earnings for the next 12 months [2].

The Artificial Intelligence Valuation Debate

Burry maintains his view that the AI boom is due to come to a screeching halt and send the stock market into a major correction [1]. He argues that depreciating chip values will be a problem for companies, a thesis challenged by fellow investor Steve Eisman [3]. Eisman countered Burry’s AI thesis on the “New Money” podcast, arguing that current high demand for older chips negates concerns about depreciation schedules [3]. Eisman noted that if AI succeeds because Anthropic and OpenAI grow like crazy, it won’t matter whether the depreciation schedule changed [3]. However, Burry theorized earlier in 2026 that hyperscalers will understate depreciation by over $175 billion between 2026 and 2028 due to AI chip accounting practices [3]. A contract secured by CoreWeave in August 2026 to rent Nvidia A100 GPUs through 2029 challenges Burry’s hypothesis that AI chips rapidly lose value [3].

Sector-Specific Risks and Counterpositions

Burry raises red flags on Oracle’s $664 billion backlog, suggesting the customer is now the lender [5]. Oracle reported $30 billion in new AI contracts in Q1 2026, claiming they were signed without requiring additional capital from Oracle [5]. Burry notes Oracle’s interest expense for the quarter reached $1.43 billion, a 55% increase from the previous period calculated as 0.923 billion [5]. Burry has also purchased put options for Micron and Nebius that expire in June 2027, indicating he anticipates significant price drops within the next few quarters [4]. He holds short positions against Nvidia and Palantir while maintaining a bullish stance on MercadoLibre [6]. On 2026-10-05, MercadoLibre stock rose 9.7% following strong performance in the Brazilian election [6]. MercadoLibre has sustained 30% revenue growth for 30 consecutive quarters, a milestone unprecedented for any large publicly traded company [6].

Sources

Market Bubble Michael Burry