Author: Claude, Deep Tide TechFlow

Deep Tide Guide: As the Nasdaq hits historic highs and Nvidia's market value approaches $5.3 trillion, Michael Burry, who rose to fame by shorting subprime mortgages during the 2008 financial crisis and is the prototype for the movie "The Big Short," is making contrary bets.

He not only maintains his bearish bets on Nvidia and Palantir but has also expanded his short positions to include semiconductor ETFs and Nasdaq ETFs, while buying traditional software stocks that have been undervalued by the AI narrative, thus building a complete "AI bubble repricing" portfolio.

This week, the Nasdaq index continuously set historic highs, closing at approximately 26,247 points on May 8, with the S&P 500 also reaching a record on the same day. The Philadelphia Semiconductor Index has risen about 55% since the second quarter, with Nvidia's stock price nearing a historic high of $217.80 and a market value exceeding $5.2 trillion. The AI-driven tech stock rally is in its hottest phase.

However, at the market's most euphoric moment, an investor known for contrarian bets is heavily betting in the opposite direction.

According to a report from Foreign Policy Journal on May 7, hedge fund manager Michael Burry, known for predicting the 2008 subprime crisis and having his story adapted into the film "The Big Short," disclosed his latest portfolio adjustments in his Substack column "Cassandra Unchained":

He not only maintains bearish options on Nvidia and Palantir, but has also added a direct short position on Palantir and expanded his bearish bets on semiconductor ETFs (SOXX), Nasdaq 100 ETFs (QQQ), and Oracle.

Meanwhile, he has begun buying a batch of traditional software companies marginalized by the AI frenzy, such as Adobe, Autodesk, Salesforce, and Veeva Systems, reasoning that the stock price declines of these companies are due to panic selling rather than fundamental deterioration.

Thus, a complete short hedge portfolio appears, with the core logic being shorting AI beneficiary stocks while going long on AI victim stocks.

Starting with the $1.1 billion bet from last November

Burry's shorting of the AI sector began in the third quarter of 2025.

At that time, the 13F filing of his hedge fund Scion Asset Management showed he had bought approximately $912 million nominal value of put options on Palantir and approximately $187 million nominal value of put options on Nvidia. This news caused a market stir after its announcement last November, leading to pressure on Palantir and Nvidia stock prices.

However, Burry later clarified on the X platform that his actual investment was about $9.2 million, not the $912 million widely reported by the media—the latter being the nominal value of the options contracts, differing by nearly a hundred times. This detail is crucial: the nominal value in the 13F filings is often misinterpreted as actual invested capital, thus exaggerating the trade scale.

Shortly after the news disclosure, Burry announced the closure of Scion Asset Management and deregistration with the SEC, ending his career in managing external funds.

He then transitioned to a personal investor and opened a column on Substack named "Cassandra Unchained" (Cassandra was a prophet in Greek mythology who foretold the truth but was never believed), continuously publishing market analyses.

Shorting Palantir has shown results; Burry claims "not low enough yet"

From the trading results, Burry's bearish bet on Palantir is currently in profit. The stock price of Palantir has dropped from around $161 when he entered to about $137 now, down about 34% from its 52-week high of $207. Despite the company recently reporting a strong first quarter of 2026 (with revenue growth of 85% year-over-year), the stock price actually dropped after the earnings report was released.

Burry has not liquidated his position. According to his Substack post, he currently holds December 2026 put options with a strike price of $100, and June 2027 put options with a strike price of $50, indicating he expects Palantir to drop more than 60% from its current level within the next year. He clearly stated in the post that Palantir's reasonable valuation is only "single digits to low double digits."

In April this year, Burry wrote on Substack that Anthropic is "eating Palantir's lunch," pointing out that this AI safety company's revenue growth has surpassed an annualized level of $30 billion, with its easier-to-use, lower-cost AI integration tools replacing Palantir's complex enterprise deployment solutions. After this post was released, Palantir's stock price fell 13.7% within a week, after which Burry deleted the post. Wedbush analyst Dan Ives dismissed this viewpoint as a "fabricated narrative," and Palantir CEO Alex Karp had also previously expressed that he could not understand Burry's short position.

Shorting Nvidia is still at a loss, but Burry insists "AI is a bubble"

Compared to the victory with Palantir, Burry's situation with Nvidia is starkly different.

Nvidia's stock price closed at about $215 on May 8, nearing its all-time high of $217.80, with a market cap of approximately $5.3 trillion. Reports indicate that Burry's put options on Nvidia have a strike price of $110 and expire in December 2027, currently in deep loss. However, he has not reduced his position but rather continued to increase it in recent portfolio adjustments.

Burry's core logic for shorting Nvidia is "overbuilding of AI infrastructure." In his first Substack article in November last year, he compared the current AI investment frenzy to the internet bubble of the late 1990s, likening Nvidia to Cisco from that time. Cisco's stock price surged by 3,800% from 1995 to 2000 and briefly became the world's most valuable company, then plummeted by over 80% when the internet bubble burst.

Burry's core arguments include that major clients like Microsoft, Google, Meta, Amazon, and Oracle are extending the depreciation period of GPUs to beautify their financial reports; he estimates that from 2026 to 2028, these accounting practices will lead to an underreporting of approximately $176 billion in depreciation expenses, artificially inflating profits across the entire industry. Additionally, he believes that the large-scale capital expenditures on current AI infrastructure are based on overly optimistic demand forecasts, similar to the frantic laying of fiber optics by telecom companies around the year 2000.

This viewpoint has prompted a direct rebuttal from Nvidia. According to CNBC, Nvidia privately distributed a seven-page memo to Wall Street sell-side analysts, refuting Burry's allegations point by point, specifically mentioning Burry's X platform posts as information sources needing rebuttal. In the memo, Nvidia stated that its clients set GPU depreciation periods based on actual usable life at four to six years and that early products (like the A100 released in 2020) still maintain high utilization rates. Burry responded that "I am not saying Nvidia is Enron," but he maintains his analysis.

Going long on software stocks suppressed by AI: a complete bubble hedge portfolio

Perhaps the most noteworthy aspect of Burry's portfolio adjustments is not the shorting itself, but his long positions.

He has recently purchased stocks in Adobe, Autodesk, Salesforce, Veeva Systems, and MSCI. These companies share a common characteristic: their business fundamentals remain robust, but their stock prices have significantly dropped due to "being disrupted by AI" market narratives and forced selling from private credit funds.

Adobe is currently down about 30% from its 52-week high, while Autodesk is down about 22% year-to-date, with both companies' forward P/E ratios having fallen back to levels from 2018 to 2019.

Burry explained on Substack that he "does not believe the technical selling pressure from private credit and software debt is sufficient to have a long-term impact on these stocks." In other words, he believes the market has over-penalized companies labeled as "AI losers" while excessively favoring those labeled as "AI winners"—and he is betting on a correction of this mispricing.

When viewing the short and long positions together, Burry is constructing a typical long-short hedge portfolio: if the AI bubble narrative bursts, high-valuation beneficiary stocks like Nvidia and Palantir will be the first to suffer, while the traditional software stocks that have been wrongly punished are expected to see valuation recovery. Even if the overall market declines, this structure may still achieve positive returns.

Burry candidly told investors in his letter when closing Scion: "My judgment of the value of securities has long been out of sync with the market." This statement reflects both self-reflection and his consistent declaration.

At the peak of the AI frenzy, he chose to stand on the opposite side of the crowd.

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