Burry Shifts from Shorts to Puts on Nvidia Amid AI Crash Warning

Michael Burry, a well-known hedge fund manager and stock picker, has made some significant changes to his bets against Nvidia. He recently covered his short positions in Nvidia (NVDA), Micron Technology (MU), and Palantir Technologies (PLTR) and replaced them with put options.

This move is part of Burry's warning about a potential '1987-style crash' driven by crowded momentum positions in artificial intelligence (AI) stocks and unsustainable leverage among growth investors. He believes that the current market situation is similar to the 2008 financial crisis, where he made a significant profit by shorting subprime mortgage bonds.

Burry's post-2008 record has been mixed, with some notable losses, including a $1.6 billion S&P 500 bet and a $47 million semiconductor ETF put that both closed at a loss in 2023. However, his current thesis about AI overcapitalization is based on more than just timing.

The real reason investors should pay attention to Burry's move is not the trade itself but the depreciation math underneath his bet. He estimates that hyperscalers will understate depreciation by approximately $176 billion between 2026 and 2028, overstating reported earnings by more than 20% during that period.