Michael Burry Bets on Early AI Bubble Crash With Put Options on Four AI Stocks

The Quick Take

• Michael Burry, known for predicting the 2008 housing crisis, anticipates an early AI bubble crash and has shifted his strategy to put options on four AI stocks.
• Burry is replacing short sales with put options — a tactical shift that maintains bearish exposure while limiting potential losses from a short squeeze.
• The move by a high-profile contrarian investor signals growing institutional conviction that AI stock valuations have overextended beyond sustainable levels.

Michael Burry, the investor whose prescient bet against subprime mortgages was documented in "The Big Short," has positioned himself for what he considers an early collapse of the artificial intelligence investment bubble. According to reporting, Burry has shifted from direct short positions to put options on four AI-related publicly listed companies, reflecting a view that the AI boom could deflate sooner than consensus expects. The tactical swap from short sales to put options limits his maximum loss to the option premiums paid while preserving asymmetric profit exposure if AI stocks decline sharply.

Burry's shift from outright shorts to put options is instructive — it signals awareness that AI stocks can continue rising before they fall, creating a short-squeeze risk that puts options eliminate. Four specific AI stock targets have been identified in Burry's portfolio disclosures, though German-language reporting focuses on the strategic positioning rather than naming all four. The move joins a growing list of contrarian investors who have questioned AI valuations while avoiding the full capital risk of naked short positions. For market participants, Burry's track record lends this positioning more credibility than typical short-seller research.

The key forward signals from Burry's positioning are the expiry dates and strike prices of his put options, which will indicate whether he expects the AI correction within months or years, and any upcoming regulatory disclosures showing additional position changes. AI earnings season results — particularly guidance on AI infrastructure revenue — will serve as the near-term test of whether Burry's early bubble thesis gains or loses credibility. Monitor whether other hedge fund managers with contrarian records begin announcing similar positions, as institutional convergence on a bearish AI thesis would itself accelerate the repricing Burry anticipates.

Synthesized from 1 source.