Author: Claude, Shenchao TechFlow
Shenchao Insight: As the Nasdaq hits consecutive record highs and Nvidia's market cap nears $5.3 trillion, Michael Burry, the investor who famously shorted the subprime mortgage market during the 2008 financial crisis and was immortalized in the movie "The Big Short," is doubling down on a contrarian bet.
He is not only maintaining his bearish bets on Nvidia and Palantir but also expanding his short positions to include semiconductor and Nasdaq ETFs. Simultaneously, he is buying traditional software stocks that have been pressured by the AI narrative, constructing a complete portfolio betting on a "re-pricing of the AI bubble."
The Nasdaq index set new record highs this week, closing at around 26,247 points on May 8, with the S&P 500 also hitting a record the same day. The Philadelphia Semiconductor Index has risen about 55% since Q2, and Nvidia's stock price is nearing its all-time high of $217.80, with its market cap surpassing $5.2 trillion. The AI-driven tech stock frenzy is at its most fervent stage.
Yet, at the market's most euphoric moment, an investor famous for his contrarian bets is heavily increasing his wager in the opposite direction.
According to a Foreign Policy Journal report on May 7, hedge fund manager Michael Burry, whose prediction of the 2008 crisis was adapted into "The Big Short," disclosed his latest portfolio adjustments in his Substack column "Cassandra Unchained" this week:
He not only maintained his put options on Nvidia and Palantir but also added a direct short position on Palantir and increased his bearish bets on the semiconductor ETF (SOXX), the Nasdaq 100 ETF (QQQ), and Oracle.
At the same time, he began buying a batch of traditional software companies marginalized by the AI hype, such as Adobe, Autodesk, Salesforce, and Veeva Systems, arguing that their stock price declines stem from panic selling rather than deteriorating fundamentals.
Thus, a complete "Big Short" hedge portfolio has emerged, with a core logic of shorting AI beneficiaries and longing AI casualties.
Starting with the $1.1 Billion Bet Last November
Burry's shorting of the AI sector began in Q3 2025.
At that time, the 13F filing of his hedge fund, Scion Asset Management, showed he had purchased put options on Palantir with a notional value of about $912 million and on Nvidia with a notional value of about $187 million. When this news was released last November, it shook the market, putting pressure on Palantir and Nvidia's stock prices.
However, Burry later clarified on platform X that his actual capital outlay was about $9.2 million, not the widely reported $912 million—the latter being the notional value of the option contracts, a difference of nearly 100 times. This detail is crucial: the notional value in 13F filings is often misread as the actual invested capital, thereby exaggerating the trade's size.
Shortly after the disclosure, Burry announced the closure of Scion Asset Management and deregistered with the SEC, ending his career of managing external funds.
He subsequently transitioned to being a personal investor and opened a column named "Cassandra Unchained" on Substack (Cassandra being the Greek mythological prophetess who foretold the truth but was never believed), where he continues to publish market analysis.
Palantir Short is Paying Off, But Burry Says "Hasn't Fallen Enough"
In terms of trading results, Burry's Palantir bet is currently profitable. Palantir's stock price has fallen from around $161 when he entered to around $137 currently, down about 34% from its 52-week high of $207. Despite the company recently releasing stellar Q1 2026 earnings (revenue up 85% year-over-year), its stock price actually declined after the report.
Burry has not taken profits. 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 he expects Palantir to fall more than 60% from current levels within the next year. He explicitly stated in a post that Palantir's fair valuation is only in the "single digits to low double digits."
In April this year, Burry posted on Substack stating that Anthropic is "eating Palantir's lunch," noting that this AI safety company's revenue growth rate has exceeded an annualized $300 billion level, and its more user-friendly, lower-cost AI integration tools are replacing Palantir's complex enterprise deployment solutions. After the post, Palantir's stock fell 13.7% in a week, and Burry later deleted it. Wedbush analyst Dan Ives dismissed this view as "fiction," and Palantir CEO Alex Karp had previously publicly stated he "could not understand" Burry's short stance.
Nvidia Short is Still Losing, But Burry Insists "AI is the Bubble"
Compared to the victory with Palantir, Burry's situation with Nvidia is completely different.
Nvidia's stock price closed around $215 on May 8, nearing its all-time high of $217.80, with a market cap of about $5.3 trillion. It is reported that Burry holds Nvidia put options with a strike price of $110, expiring in December 2027, which are currently in deep loss. However, he has not reduced his position; instead, he continued adding to it in his recent portfolio adjustments.
The core logic behind Burry's Nvidia short is "overbuilding of AI infrastructure." In his first Substack article last November, he compared the current AI investment frenzy to the internet bubble of the late 1990s, likening Nvidia to Cisco back then. Cisco's stock rose 3,800% between 1995 and 2000, once becoming the world's most valuable company, before plummeting over 80% during the dot-com bust.
Burry's key arguments include: Hyperscale customers like Microsoft, Google, Meta, Amazon, and Oracle are extending GPU depreciation schedules to beautify their financial reports; he estimates that between 2026 and 2028, these accounting treatments will cumulatively understate approximately $176 billion in depreciation expenses, inflating the entire industry's profits. Furthermore, he argues that the massive capital expenditure on current AI infrastructure is built on overly optimistic demand forecasts, mirroring the situation when telecom companies frantically laid fiber optic cables around 2000.
This viewpoint drew a direct rebuttal from Nvidia. According to CNBC, Nvidia privately distributed a seven-page memo to Wall Street sell-side analysts, responding point-by-point to Burry's allegations, specifically citing Burry's X platform posts as sources of information needing refutation. Nvidia stated in the memo that its customers set GPU depreciation periods at four to six years based on actual useful life, and early products (like the A100 released in 2020) still maintain high utilization rates. Burry responded, "I'm not saying Nvidia is Enron," but stood by his analysis.
Going Long on AI-Pressured Software Stocks: A Complete Bubble Hedge Portfolio
Perhaps the most noteworthy aspect of Burry's portfolio adjustments is not the shorts themselves, but his long positions.
He recently bought stocks like Adobe, Autodesk, Salesforce, Veeva Systems, and MSCI. The common characteristic of these companies is: their business fundamentals remain robust, but their stock prices have suffered significant declines 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 is down about 22% year-to-date, and both have seen their forward P/E ratios fall back to 2018-2019 levels.
Burry explained on Substack that he "does not believe the technical selling pressure from private credit and software debt is sufficient to impact these stocks in the long term." In other words, he believes the market is over-penalizing companies labeled "AI losers" and over-praising those labeled "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 bear the brunt, while wrongly punished traditional software stocks may see valuation recovery. Even if the overall market declines, this structure could potentially achieve positive returns.
In his letter to investors when closing Scion, Burry admitted: "My judgments on the value of securities have been out of sync with the market for a long time now." This statement is both self-reflection and seems like his consistent manifesto.
At the peak of the AI frenzy, he chooses to stand against the crowd.
