In a recent Substack post, Burry stated he is “more confident than ever before” that his pessimistic outlook will materialize over the next 12 months. This represents a sharp acceleration from his previous “base case” prediction of 2028. The shortened timeline has driven him to seek “more leverage in my short positions.” To achieve this, he covered his outright short positions and replaced them with bearish put options. This strategy allows him the right, but not the obligation, to sell shares at a fixed strike price before a set expiry date. If the stock falls below that price, he can exercise the puts or sell the contracts for a profit, amplifying his returns if the market declines more steeply than a simple short would capture.
The investment strategy extends beyond Nvidia. Burry disclosed that he has purchased puts on Palantir, Micron, Nebius, Oracle, Caterpillar, the iShares Semiconductor ETF, and the Nasdaq 100 index. These positions expire between June and December of next year. His Nasdaq 100 puts are struck in the $24,000s, signaling an expectation that the tech-heavy index could slump by nearly 20% within the coming year, down from its current level of approximately $30,300. He has also closed his short position in CoreWeave, with plans to buy puts once they become attractively priced, and has added fresh puts on MetLife.
Debt-Fueled Strain in the Infrastructure Buildout
Burry’s urgency stems from his analysis of how AI companies are financing their massive infrastructure requirements. He argues that the sector is riding a wave of debt-fueled spending that is showing clear signs of strain. “If the spending stops or slows, it all comes apart,” Burry wrote, noting that the cash being used for data center construction is “increasingly debt, with strings attached.”
He points to the hyperscalers—major cloud computing providers—as the epicenter of this risk. “There are signs of strain at each of the big hyperscalers,” he observed, suggesting that public comments and corporate filings provide clues to the underlying stress. Burry believes these companies are masking slowing growth through overinvestment in chips and data centers. He further alleges that they are using accounting tricks to inflate short-term earnings and harming shareholders by issuing excessive stock to compensate employees. Additionally, he highlights “circular-financing deals” as mechanisms used to fuel hype and sustain the current market momentum.
The macroeconomic environment adds further pressure to this fragile structure. Burry warns that rising interest rates could “stress every part of that chain,” particularly given that private equity, private credit, and insurers are financing much of the AI infrastructure buildout. As bond yields soar and inflation threats resurge, the cost of servicing this debt increases, potentially turning the screw on AI companies whose growth projections may not support their leverage levels.
Despite these warnings, the market has largely ignored the concerns. Stocks have continued to reach all-time highs this year, shrugging off not only skepticism about AI optimism but also headwinds such as foreign conflicts and rising rates. Burry, who pivoted from running a hedge fund to publishing his personal trades on Substack last fall, remains an outlier in this environment. His disclosure of specific strike prices and expiry dates provides a detailed roadmap of his expectations: a significant correction in the tech sector within the next year, driven by the unsustainable economics of AI infrastructure expansion.
For investors, the next several months will serve as a critical test of Burry’s thesis. The key variables to watch are the continued trajectory of interest rates, the debt covenants attached to AI infrastructure loans, and whether the “spending wave” Burry identifies begins to slow. If the narrative of perpetual AI growth falters, the leveraged positions Burry has taken could yield substantial returns, validating his view that the current boom is a bubble nearing its peak.
