Michael Burry, the investor made famous by “The Big Short”, is maintaining his bearish stance on markets despite the S&P 500 pushing to record highs, warning that the rally could still end in a sharp reversal similar to the 1987 stock market crash.
“I continue to believe it is possible we are near a major top, and possible a 1987-type fall, but the S&P 500 making new highs likely will bring new money into the market,” Burry said in a Tuesday Substack post.
The warning came as the S&P 500 surged 1.9% to its first record close since June, supported by stronger-than-expected corporate earnings and falling oil prices as hopes increased that the Strait of Hormuz could reopen to shipping. The Nasdaq Composite jumped 2.7%, extending its two-day gain to nearly 5%.
Burry has become one of Wall Street’s most prominent critics of the artificial intelligence boom, arguing that the rapid expansion of AI infrastructure spending may be supported by financing structures that are difficult to sustain.
The investor said the market’s gains have created a self-reinforcing cycle, where declining volatility encourages systematic funds to increase exposure and adds further momentum to the rally.
“Remember, the market going up on falling volatility forces vol-targeting funds to leverage up, and brings leverage from other momentum strategies into play,” he wrote.
Burry said he continues to hold short positions against the iShares Semiconductor ETF (SOXX), Micron, Nvidia, Caterpillar, Palantir, Tesla and Applied Materials.
While remaining confident in his longer-term view, Burry said he would reduce his positions if the trades moved decisively against him. He added that all of his positions remain profitable except his Nvidia short.
“Again, shorting is not for everyone,” Burry wrote. “I must short. Most should not.”
Burry’s semiconductor trade gains attention
Burry’s bearish semiconductor position has attracted renewed attention after a sharp decline in chip stocks following his decision to short the sector.
The investor disclosed in a 30 June Substack post that he had shorted the iShares Semiconductor ETF (SOXX) at around $643 and renewed bearish put options on the fund.
The ETF, which tracks the NYSE Semiconductor Index and includes major chipmakers such as Nvidia, AMD, Micron and Intel, fell around 21% over the following month, closing at $505 on July 31.
Larry McDonald, author of “The Bear Traps Report” newsletter and former head of U.S. macro strategy at Société Générale, praised Burry’s trade, noting the weakness across semiconductor ETFs.
“Semiconductor ETFs - Last 30 years, coming into this July (2026), the worst month of July was -5.26%, and the last 30 days? -17.59%. Just wow.”
Burry previously explained his bearish view by pointing to stretched semiconductor valuations. He said the Philadelphia Semiconductor Index had become the most overextended since 2000 relative to its 200-day moving average, while its price-to-sales ratio had climbed above 16.
He described SOXX as a “pure form of overvaluation in an index” and said he had rolled his put options into contracts expiring in March 2027 with strike prices in the low-to-mid $400s.
Burry later increased his bearish exposure, saying on July 24 that he had strengthened his SOXX short around $536, describing the combined position with his options as a “large position”.
On July 30, he said he had increased the short again around $506, arguing the bullish semiconductor trade had lost momentum and was beginning to “look tired”.
The investor has also disclosed bearish positions against individual semiconductor companies, including Nvidia and Micron, as well as the Nasdaq 100.
AI spending concerns central to outlook
Burry’s market concerns extend beyond semiconductor valuations, with the investor repeatedly warning that the broader artificial intelligence boom may be overheating.
He has argued that major technology companies, including hyperscalers such as Meta and Alphabet, are spending heavily on chips and data centres that could become outdated within a few years.
The investor has also criticised partnerships between major AI companies, including Nvidia and OpenAI, suggesting some agreements resemble “give-and-take” arrangements that help maintain enthusiasm around AI development.
Despite his reputation for predicting major market shifts, Burry does not disclose the full size of his positions, making it difficult to determine the exact gains or losses from his trades.
Burry exits Microsoft, closes Oracle short
While increasing some bearish positions, Burry has also adjusted several technology-related trades following strong earnings from major companies.
The investor recently sold his Microsoft shares, closed his Oracle short position and reduced parts of his bearish Palantir position, according to updates shared through his Substack.
Burry on Tuesday said he sold off Microsoft shares, closed his short position in Oracle stock, and partially reduced his bearish bet in Palantir stock.
The moves came after strong earnings results from major technology companies. Microsoft, Amazon and Alphabet exceeded revenue and profit expectations, while Amazon and Alphabet increased their capital expenditure forecasts.
Palantir also reported strong quarterly results, with shares rising nearly 30% following its earnings release.
Burry said his Microsoft trade benefited from favourable timing but that he did not share the same level of enthusiasm as the broader market following the company’s results.
“That position benefitted from some lucky timing, and I cannot say my enthusiasm for Microsoft's earnings report rose to the same level as that of the market,” Burry wrote.
Microsoft reported a 19% increase in fiscal fourth-quarter revenue, while Azure cloud revenue rose 43%, exceeding Wall Street expectations.
On Oracle, Burry said he decided not to extend his put options after securing significant profits.
“These were the January 2027 low 100s strikes, and I decided not to roll them. The profit there was substantial, and so I left it at that. Should volatility come down, I may re-enter Oracle puts.”
Burry has remained particularly critical of Palantir, continuing to maintain a direct short position despite closing or allowing some put options to expire.
Palantir reported second-quarter revenue of US$1.94 billion, nearly doubling from the previous year. U.S. commercial revenue surged 149%, while U.S. government revenue increased 90%.
The company also raised its 2026 revenue forecast to between US$8.15 billion and US$8.16 billion, compared with a previous upper target of around US$7.66 billion.
