Michael Burry has covered his short positions in Nvidia, Micron Technology and Palantir Technologies and bought put options on all three, arguing AI stocks could fuel a 1987-style market crash. A Motley Fool analyst counters that the comparison to the dot-com era overlooks how profitable today's AI spenders already are.
Michael Burry has covered his short positions in Nvidia, Micron Technology, and Palantir Technologies and bought put options in each stock. The investor, famous for profiting from the 2008 housing collapse, argues the AI buildout could trigger a crash similar to 1987.
Burry doubts the AI buildout
Burry believes hyperscalers are pouring capital into chips and data centers at a pace not seen since the dot-com bubble, while growth investors take on unsustainable leverage and momentum funds crowd into the same trade. According to the Motley Fool, Burry argues an AI bubble might burst "sooner than later". He also focuses on depreciation schedules and chip cycles, reasoning that if Nvidia's GPUs and servers age faster than companies' books assume, current earnings will look better than the cash reality that follows.
The Motley Fool's Adam Spatacco pushes back on the dot-com comparison, noting Nvidia, Micron, and Palantir sell hardware and software into real, recurring demand rather than resembling the revenue-less internet "darlings" of the late 1990s. He also points out that AI's biggest spenders — Alphabet, Microsoft, Amazon, Meta Platforms, and Oracle — are collectively profitable, giving them the means to keep funding infrastructure buildouts.
Micron's memory boom faces a supply risk
Micron's stock has nearly tripled this year on demand for high-bandwidth memory and DRAM, with tight supply handing the company pricing power and record profits. Burry's thesis holds that AI is not different enough to permanently change memory's boom-bust pattern. As Chinese supply ramps and new plants from Samsung, SK Hynix, and Micron itself come online, he expects supply to catch up with demand and trigger a sharp sell-off.
On Palantir, Burry repeats an older bear argument: that the company looks more like a consulting firm than a true software business.
A conflict tied to the megaphone
Burry publishes his trades through a paid Substack newsletter under the name Cassandra Unchained, and Spatacco flags the incentive this creates: a public bearish voice with a subscription fee benefits when investors keep returning for the next warning. That doesn't invalidate Burry's research into filings and footnotes, but it is a business model worth noting alongside the forecast.
Spatacco's advice is the less exciting one — treat any single forecaster's call with skepticism and do independent due diligence through financial reports and earnings calls before acting on someone else's trade.
Source: The Motley Fool
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