Author: Claude, Deep Tide TechFlow

Deep Tide Summary: As the Nasdaq hits record highs and Nvidia's market capitalization approaches $5.3 trillion, Michael Burry, who rose to fame during the 2008 financial crisis for shorting subprime mortgages and is the real-life inspiration for the movie "The Big Short," is now raising his bet in the opposite direction.

He not only maintained his bearish bets on Nvidia and Palantir, but also expanded his shorting to include semiconductor ETFs and Nasdaq ETFs, while buying traditional software stocks that were being pressured by the AI narrative, creating a complete "AI bubble repricing" portfolio.

The Nasdaq Composite Index hit new record highs this week, closing at approximately 26,247 points on May 8th, while the S&P 500 also reached a record on the same day. The Philadelphia Semiconductor Index has risen approximately 55% since the second quarter, and Nvidia's stock price is nearing its all-time high of $217.80, with its market capitalization exceeding $5.2 trillion. The AI-driven tech stock frenzy is at its most intense.

But at the height of the market frenzy, an investor known for his contrarian betting is significantly increasing his stake in another direction.

According to a report in the Foreign Policy Journal on May 7, Michael Burry, the hedge fund manager whose prediction of the 2008 subprime mortgage crisis was adapted into the movie "The Big Short," disclosed his latest portfolio adjustments this week on his Substack column "Cassandra Unchained."

He not only maintained his put options on Nvidia and Palantir, but also added a direct short position on Palantir and expanded his put bets on the Semiconductor ETF (SOXX), Nasdaq 100 ETF (QQQ), and Oracle.

At the same time, he began buying shares in a group of traditional software companies that had been marginalized by the AI boom, such as Adobe, Autodesk, Salesforce, and Veeva Systems, arguing that their stock price declines were due to panic selling rather than deteriorating fundamentals.

Thus, a complete short-selling hedging strategy has emerged, with the core logic being to short AI beneficiary stocks and go long on AI victim stocks.

Let's start with the $1.1 billion bet last November.

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

At the time, a 13F filing by his hedge fund, Scion Asset Management, revealed that he had purchased approximately $912 million worth of put options on Palantir and approximately $187 million worth of put options on Nvidia. This news, released last November, sent shockwaves through the market, putting downward pressure on the share prices of both Palantir and Nvidia.

However, Burry later clarified on the X platform that his actual investment was approximately $9.2 million, not the widely reported $912 million—the latter being the notional value of the options contract, a difference of nearly a hundredfold. This detail is crucial: the notional value in 13F filings is often misinterpreted as the actual invested funds, thus exaggerating the size of the transaction.

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

He later transitioned into an individual investor and started a column on Substack called "Cassandra Unchained" (Cassandra is a prophet in Greek mythology who foretold the truth but no one believed him), where he continuously published market analysis.

Palantir's short selling has yielded results; Burry says "it hasn't fallen enough yet."

Based on the trading results, Burry's bet on Palantir is currently profitable. Palantir's stock price has fallen from approximately $161 when he entered the position to approximately $137 currently, a cumulative drop of about 34% from its 52-week high of $207. Despite the company just releasing a strong Q1 2026 earnings report (revenue up 85% year-over-year), the stock price actually fell after the earnings announcement.

Burry did not take 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, meaning he expects Palantir to fall more than 60% from its current level within the next year. He explicitly stated in his post that Palantir's fair value is only at the "low end of single to double digits."

In April of this year, Burry posted on Substack that Anthropic was "eating Palantir's lunch," pointing out that the AI security company's revenue growth had exceeded $30 billion annualized, and that its easier-to-use, lower-cost AI integration tools were replacing Palantir's complex enterprise deployment solutions. Following the post, Palantir's stock price fell 13.7% within a week, and Burry subsequently deleted the post. Wedbush analyst Dan Ives dismissed this view as a "fictional narrative," and Palantir CEO Alex Karp had previously publicly stated that he "could not understand" Burry's short-selling stance.

Shorting Nvidia is still unprofitable, but Burry insists "AI is a bubble."

In contrast to Palantir's victory, Burry's situation with Nvidia is quite different.

Nvidia's stock closed at approximately $215 on May 8th, nearing its all-time high of $217.80, with a market capitalization of approximately $5.3 trillion. Reports indicate that Burry's Nvidia put options, with a strike price of $110 and expiring in December 2027, are currently showing a significant loss. However, he has not reduced his holdings; instead, he has recently increased his position.

Burry's core logic for shorting Nvidia is "over-investment in AI infrastructure." In his first Substack article last November, he drew a parallel between the current AI investment boom and the dot-com bubble of the late 1990s, comparing Nvidia to Cisco. Cisco's stock price surged 3,800% between 1995 and 2000, making it the world's most valuable company at one point, before plummeting by over 80% during the dot-com bubble burst.

Burry's core arguments include: hyperscale customers such as Microsoft, Google, Meta, Amazon, and Oracle are extending the depreciation period of GPUs to improve their financial statements; he estimates that between 2026 and 2028, these accounting practices will cumulatively understate depreciation expenses by approximately $176 billion, artificially inflating profits across the industry. Furthermore, he believes that the current massive capital expenditures on AI infrastructure are based on overly optimistic demand forecasts, mirroring the frenzied fiber optic cable laying by telecommunications companies 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, addressing Burry's accusations point by point, specifically citing Burry's X platform posts as a source of information to refute. In the memo, Nvidia stated that its customers set GPU depreciation periods at four to six years based on actual lifespan, and that early products (such as the A100 released in 2020) still maintain high utilization rates. Burry responded, "I'm not saying Nvidia is Enron," but maintained his analysis.

Going long on software stocks suppressed by AI: A complete bubble hedging portfolio

What's most noteworthy about Burry's portfolio adjustments is perhaps not the shorting itself, but rather his long positions.

He recently bought shares in companies such as Adobe, Autodesk, Salesforce, Veeva Systems, and MSCI. These companies share the common characteristic of having solid business fundamentals, but their stock prices have plummeted due to market narratives of "AI disruption" and forced selling by private credit funds.

Adobe is currently down about 30% from its 52-week high, and Autodesk is down about 22% this year. Both companies' forward price-to-earnings ratios have fallen back to the levels of 2018 and 2019.

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 has over-punished companies labeled as "AI losers" and over-hyped companies labeled as "AI winners"—and he is betting on a correction of this mispricing.

By combining short and long positions, Burry has constructed a typical long-short hedging strategy: if the AI bubble narrative bursts, highly valued beneficiaries like Nvidia and Palantir will be the first to suffer, while traditional software stocks that have been unfairly punished are expected to see a valuation recovery. Even if the overall market declines, this structure could potentially achieve positive returns.

In a letter to investors when Scion was closed, Burry frankly admitted, "My judgment of securities value has been out of sync with the market for a long time." This statement is both a self-reflection and a declaration that he has always made.

At the height of the AI craze, he chose to stand on the opposite side of the crowd.

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