Michael Burry Just Put a Clock on the AI Bubble

I've been watching Michael Burry for years, and the man has a habit of being early. Sometimes painfully early. So when he says a single weekend of research changed his mind about when the AI bubble pops, I lean in.

What Burry Actually Did

Burry didn't just tweak his portfolio. He swapped short stock positions for put options, which sounds like a minor distinction until you think about what it actually means.

A short position is open-ended. You borrow shares, sell them, and hope to buy them back cheaper. Your downside is theoretically unlimited, and you pay borrow fees the entire time you sit and wait. A put option is different. You're buying a contract that gives you the right to sell at a set price before a set date. The cost is capped. The timeline is fixed.

The names involved tell you something too. Micron, Nebius, Nvidia, Palantir, and a semiconductor exchange-traded fund. That's not a random basket. That's the AI trade, top to bottom, from memory chips to GPUs to the software layer riding on top of both.

His original thesis had the bubble bursting in 2028. Now he says the weekend research pulled that date forward. He dropped the news Monday on his Substack, Cassandra Unchained, which is a fitting name for a man who keeps warning people about things they'd rather ignore.

Here's what most coverage glossed over. When you move from shorts to puts, you're not just changing instruments. You're putting a clock on your own thesis. That's a real shift in conviction, and it's worth more attention than the ticker list.

Why This Matters Beyond Burry

Pull the camera back for a second.

The AI trade has been the single biggest driver of equity returns for two years running. Nvidia alone added trillions in market cap. Palantir trades at a multiple that makes value investors reach for antacids. If Burry is right that the unwind comes sooner, the question isn't whether a handful of stocks fall. It's what happens to the indexes, the pension funds, and the retail accounts holding them.

The question worth asking: does the AI capital spending story actually support these valuations, or is it a circular trade where chipmakers fund startups that turn around and buy more chips?

That's not a rhetorical jab. It's the exact kind of loop Burry built a career on spotting, and granted, he's not the only one asking now. Skeptics have been circling for a while. Proponents keep pointing at earnings, and the earnings, to be fair, have mostly held up.

My Honest Take

Color me skeptical, but I'm not going to pretend I know the timing any better than he does.

What I do know is that Burry's track record is a mixed bag. He called the 2008 housing crash, famously and profitably. He's also been early on plenty of things that took years to play out, or never did at all. Being right eventually and being right on time are very different skills, and only one of them pays the bills.

Admittedly, the switch to puts is a tell. It says he wants defined risk and a defined window. History suggests otherwise nailing the exact month a bubble pops. Nobody does that reliably, not even the guy from The Big Short.

So what should you do with this information? Nothing dramatic, probably. If you're heavy in AI names, this is a reasonable moment to check your position sizes. If you're not, don't short anything just because a guy on Substack said so.

Time will tell, though. And if Burry turns out to be right again, he'll have gotten there first, which is exactly the pattern that made him worth listening to in the first place.