A Contrarian Stance Amid Market Euphoria
Michael Burry, the hedge fund manager famously chronicled in “The Big Short,” has intensified his bearish stance against the artificial intelligence sector. In his latest Substack update, “Trading Post August 13, 2026,” Burry disclosed that he has increased his short bets against Micron Technology (NASDAQ:MU) and rolled his put options on the Invesco QQQ Trust (NASDAQ:QQQ) to higher strike prices and further expiration dates.
Burry’s pivot comes as the broader US stock market continues to reach record highs, largely driven by massive capital expenditure in AI infrastructure. Despite his warnings, the market has thus far brushed aside his concerns, with Micron shares soaring 671% over the past year and the QQQ ETF, which tracks the NASDAQ 100, maintaining consistent year-to-date gains.
The “AI Bubble” Thesis
Burry draws direct parallels between the current AI narrative and the dot-com bubble of 2000 and the 2008 housing crisis. He argues that the “seemingly unassailable positivity” around AI is a coordinated effort to prop up a narrative that lacks fundamental support. According to Burry, the current situation is “orders of magnitude more dangerous” than the Enron scandal, citing concerns over aggressive accounting, off-balance-sheet financing, and circular capital flows where AI companies effectively fund each other’s revenue growth.
“My base case is 2028,” Burry noted in a post, suggesting that is when the compute requirements will reach a breaking point. He warns that the maintenance capital expenditures required to sustain AI infrastructure will eventually cause returns on capital to crater, hurting future investment.
Micron and the Semiconductor Trade
The Micron short is particularly high-stakes. Micron reported a fiscal Q3 2026 revenue of $41.5 billion, representing a 346% year-over-year increase, and has provided strong guidance for fiscal Q4. With 40 of 45 analysts maintaining a “Buy” rating and a consensus price target of $1,502, Burry is betting against a massive wall of institutional optimism.
While Micron’s forward P/E ratio of 5.55x suggests the market is pricing in peak earnings, the stock’s high beta indicates extreme volatility. Burry’s position as a contrarian remains firm, as he views the memory chip industry as historically cyclical and prone to oversupply, despite CEO Sanjay Mehrotra’s assertions that demand will continue to exceed supply through 2027.