Michael Burry, the investor famous for predicting the 2008 housing crash, has made a bold move against tech giant Nvidia. He’s betting the company’s stock will fall, surprising many investors who’ve watched Nvidia become a market superstar.
Burry revealed his position through SEC filings showing he holds put options against Nvidia. These are financial tools that make money when a stock’s price drops. This isn’t just a small wager – it represents a significant portion of his fund’s strategy.
Why target Nvidia? The chipmaker has seen its value skyrocket by over 200% this year alone. The company makes specialized chips that power artificial intelligence systems being built by tech companies worldwide.
“When everyone believes something is a sure thing, that’s precisely when investors should be most cautious,” said market analyst Sarah Chen at FinTech Research. “Burry has a history of spotting overvalued markets before others.”
Burry isn’t only focused on Nvidia. His filings show he’s also betting against Chinese technology companies and the broader semiconductor industry. This suggests he sees deeper problems than just one overvalued company.
The timing is interesting. Nvidia recently announced record profits as AI companies can’t get enough of their chips. Cloud providers like Microsoft, Google, and Amazon have been spending billions to build AI systems that all need Nvidia’s specialized hardware.
Tech investor Marcus Williams explains: “Nvidia has become the pick-and-shovel seller in the AI gold rush. Everyone needs their tools to participate in the AI revolution.”
So why is Burry going against the crowd? Some experts point to valuation concerns. Nvidia’s price-to-earnings ratio has climbed to levels that historically signal a stock might be overpriced. Others note potential competition from rivals like AMD and Intel who are racing to catch up.
There’s also worry about how sustainable the AI boom will be. If companies slow their AI spending due to economic concerns or disappointing results, Nvidia could see demand drop quickly.
The China angle adds another layer to Burry’s bet. The US government has restricted sales of advanced chips to China, potentially limiting Nvidia’s growth in a massive market. Meanwhile, China is pouring resources into developing its own chip technology.
“Betting against Nvidia right now feels like standing in front of a freight train,” commented financial blogger Tina Rodriguez. “But Burry made his name doing exactly that before the 2008 crash when everyone thought housing prices could only go up.”
Burry’s previous big calls have been remarkably prescient. His bet against the housing market before the 2008 financial crisis was featured in the book and movie “The Big Short.” More recently, he warned about market bubbles before tech stocks tumbled in 2022.
Not everyone agrees with Burry’s pessimistic view. Many Wall Street analysts still have “buy” ratings on Nvidia, pointing to continued strong demand for AI chips and the company’s dominant position in this critical technology.
What does this mean for everyday investors? It’s a reminder that even the hottest stocks can face corrections. Diversification remains important, especially when certain sectors become extremely popular.
For now, the market will watch to see if Burry’s timing is right again or if Nvidia’s AI-fueled growth can continue defying expectations. Either way, his bold bet has people talking about whether the AI boom has pushed tech valuations into unsustainable territory.
The coming months will reveal whether Burry spotted another bubble before it burst or if Nvidia’s revolutionary technology will keep driving its success for years to come.
