Burry Bets Against Nvidia as AI Boom Fears Rise

Michael Burry, the renowned hedge fund manager portrayed in 'The Big Short', has increased his short position on AI chip giant Nvidia while buying call options to hedge against a potential surge. He disclosed that he purchased December call options with strike prices in the mid-to-high $200 range, stating that this move was not to make money but to protect his massive short exposure.

Burry's bearish thesis on Nvidia is based on his valuation model, which shows the company's theoretical value far below its current market value. He argues that Nvidia's monopoly position has a limited duration and will lead to declining profit margins in the future.

The hedge fund manager also added to short positions this week in Oracle (ORCL), Palantir (PLTR), Nebius (NBIS), and Caterpillar (CAT). Despite his doubts about Nvidia's long-term prospects, Burry expects the market reaction to earnings to be a 'coin flip' and difficult to predict.

Burry has been sounding warnings about the AI investment boom in recent months and earlier this month raised the specter of a 1987-style market crash. His total equity short exposure now exceeds 21% of his portfolio, not including put option positions.