Even as Nvidia continues to generate remarkable financial results, Michael Burry is intensifying his doubts about the artificial intelligence trade by adding to multiple short positions. In an August 26 Substack post titled “Nvidia, Friends, and the Rebel Alliance,” the investor well-known for his wager against the U.S. housing market increased his short positions in Nvidia, Oracle, Palantir, Nebius, and other companies.
With put options excluded, his short stock holdings now make up over 21% of his portfolio. Burry does not contest Nvidia’s operational strength. Rather, he questions whether that strength will last long enough to support its market value.
According to Burry, Nvidia’s growth and comparatively low earnings multiple make it appear “wildly undervalued.” According to him, the issue is that although the market is already aware of Nvidia’s dominant position, the stock has not been able to replicate the remarkable growth observed in prior years. The longevity of Nvidia’s current economic dominance is crucial to his valuation thesis.
Burry contends that because he anticipates a short lifespan for Nvidia’s effective monopoly and remarkable margins, the company’s theoretical value is still significantly below its market capitalization. He also wonders if shareholders will eventually receive a sufficient portion of the company’s enormous profits.
However, Burry recognizes the risk of placing a wager against Nvidia. He increased his short position and bought December call options with strike prices in the mid-to-high $200 range prior to the company’s most recent earnings report. He described those calls as a hedge rather than a bullish trade, stating that the position accounts for between 3.5 and 4% of his portfolio.
His wider stance indicates that Nvidia is not the only company he is concerned about. Oracle, Palantir, and Nebius each represent a distinct aspect of the software and AI infrastructure boom.
Because of this, Burry’s trade is essentially a wager that the markets are overvaluing the longevity of current AI economics. Burry can acknowledge Nvidia as a remarkable company while claiming that its stock is still pricey, which is a deliberate contradiction. What investors are paying now for profits they believe will last for a very long time is the subject of his caution.
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