Michael Burry made his name betting against Wall Street. Now, he’s betting against Silicon Valley, sparking a hot debate over whether we’re in an AI bubble.
Burry became famous as one of the few investors who saw the 2008 housing crash coming, as told in Michael Lewis’ bestseller The Big Short. It was a compelling story about a Wall Street outsider whose intense research led him to a conclusion most bulls missed.
Now he’s making a similar call on AI. His argument is that a small cluster of companies (Nvidia, OpenAI, Microsoft, Oracle, CoreWeave, etc), are increasingly funding each other. The concern is that money is leaving one balance sheet as an “investment” and coming back as revenue on another. Burry doubts it can go on forever and he seems willing to wait it out. He has suggested some big cracks could start to show by 2028.
But Burry isn’t just betting against AI. He’s also been buying a lot of stocks. On the latest episode of Ticker Take, we explored his contrarian nature. To make his buy list, it seems the most common recipe is a misplaced stock he thinks can deliver 15 percent annualized returns over 15 years or more.
Here’s a rundown of both sides of his book, and how it compares to the Wall Street view. One caveat: Burry can be quick to trim or rotate, so it’s best to keep tabs on his X posts or Substack writings to see where his next trades will take him.
THE SHORTS
Nvidia (NVDA)
Wall Street loves Nvidia, which makes the company tough to short by his own admission. About 95 percent of analysts rate it a buy. Burry isn’t saying it’s a bad company. His bet is just that a stock this loved is cheap to bet against. Interestingly, he says the cost of insuring Nvidia’s debt has been going up, a sign others are starting to feel the same way.
Palantir (PLTR)
Two thirds of Wall Street likes Palantir too. Burry shorted it back in November. His deep dive on the company’s financials suggested the company’s accounting may be aggressive, although most analysts would disagree. Like Nvidia, shorting a popular name can be tricky. He previously said he cut the position in half in June, right before the stock jumped 30 percent in one day.
Micron (MU)
Micron looks like a clear AI winner, and Wall Street agrees. Burry doesn’t care about this cycle. He looks at 40 years of Micron’s history, where returns have averaged just four to seven percent. His words: Micron is “a destroyer of capital.” He also thinks the current chip shortage is making people think this time is different, but he doesn’t buy it.
Oracle (ORCL)
While more than 80 percent of analysts like Oracle, Burry’s worry is debt. Oracle has taken on close to US$95 billion to build AI data centers. He’s said he won’t short companies like Meta, Alphabet, or Microsoft since those companies have huge businesses outside of AI. Oracle, in his opinion, doesn’t have that cushion.
Nebius (NBIS)
A smaller AI cloud stock that two thirds of the Street still likes. Burry’s short comes down to pricing. Nebius charges roughly double for short-term computing contracts versus long-term ones. He reads that as customers not expecting today’s high prices to stick around.
Caterpillar (CAT)
Caterpillar’s power generation business is riding a wave of demand thanks to the data centre boom. It’s a stock Burry says he has liked before, and most analysts see it as a continued winner. However Burry thinks it’s a mistake for the market to price Caterpillar like an AI company, as opposed to an industrial equipment maker.
THE LONGS
JD.com (JD)
This is one where Burry appears less like a contrarian, since more than 90 per cent of the Street likes JD. But what makes this trade stand out is that he says he sold his entire Alibaba stake to fund the position. His bet on JD is that China’s e-commerce price war eases up, and JD benefits more than Alibaba when it does.
MercadoLibre (MELI)
Also a name where Burry’s call lines up with a lot of analysts. Often called the Amazon of Latin America, about 85 percent of the Street backs it. Burry said he bought the stock after its worst one day drop in more than a year. That short-term selloff opportunity played into his 15 percent a year, 15-year approach to stock buying.
Zoetis (ZTS)
The world’s largest animal health company. Similarly to MercadoLibre, he said he bought in after a poorly received set of financial results. Overall, Wall Street is more split on this one, with less than half of the analysts rating it a buy. He has said he sees Zoetis as being “run very well, and conservatively financed.”
Molina Healthcare (MOH)
One of his lonelier long bets, since only about 20 percent of the Street likes it. Most Medicaid insurers are losing money right now, but Burry thinks Molina is one of the few that stays profitable through it. He’s talked about it being a good pair with his Palantir short, calling the two a good combo, “like peanut butter and bananas.”
Flutter Entertainment and DraftKings
Both stocks got hit by prediction markets like Kalshi, which offer sports betting without paying the same taxes as licensed gambling companies. Burry’s bet is that this loophole eventually closes. He first bought both, then sold DraftKings and added to Flutter after a rough quarter, calling it a “fat pitch.” It’s worth noting that Burry’s not entirely a contrarian on this one. Wall Street also likes both names.
The Ticker Take
Burry seems to be less of a short-seller and more of an opportunistic investor. He often likes to go against the crowd, in search of winning shorts or mis-priced stocks with long-term potential. He’s often the first to say that his approach is definitely not for everyone. But it does highlight what it’s like to be a market contrarian.
Jon Erlichman is a BNN Bloomberg contributor and the host of Ticker Take on YouTube.
