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AI Bear Burry Bets Big Against Tech Bubble
26 Sep
Summary
- Michael Burry sees NASDAQ as historically overvalued and top-heavy.
- He is increasing short positions on major AI stocks like Palantir.
- Burry is also buying deeply discounted stocks outside the AI sector.
Michael Burry, the investor famous for predicting the 2008 financial crisis, is doubling down on his bearish stance against the tech sector. He characterizes the current NASDAQ as "historically overvalued, and historically top heavy," increasing his confidence to expand short positions against prominent AI companies.
Burry's thesis includes a forecast of an impending chip glut due to the semiconductor industry's cyclical nature. He anticipates that production increases over the next two years will lead to a downturn in memory prices. Supporting this view, Acer's CEO noted no memory shortages, citing increasing production capacity in China.
While bearish on AI, Burry is actively seeking opportunities in undervalued companies. He has established "full positions" in five deeply discounted stocks: QXO, Sprouts Farmers Market, Build-A-Bear, Birkenstock, and Mercado-Libre. These companies have experienced significant year-to-date declines, with some falling as much as 57%.
Other notable investors share Burry's skepticism about AI stock valuations. Jeremy Grantham of GMO described current AI valuations as a "bubble," expecting a significant market correction. Similarly, Jeffrey Gundlach of DoubleLine Capital warned of potential "fallout and losers in the AI race" and advised avoiding overconcentration in AI equities, suggesting diversification into bonds and other assets.
