Prominent investor Michael Burry, who has attracted attention in recent months for criticizing the artificial intelligence boom, is taking a short position Oracle company
Burry said in a Substack post after the market closed Friday that he owns put options on Oracle stock. The value of a put option generally increases as the price of the underlying asset falls. Burry reveals short bet on AI chip maker NVIDIA company and Palantir Technology In November, the company also directly shorted Oracle over the past six months, he said.
Oracle is best known for its database software, but its recent push into cloud computing services requires expensive data center capacity construction, for which it has taken on huge debt.
“I don’t like its positioning or the investments it’s making. It doesn’t have to do what it’s doing, and I don’t know why it’s doing it. Maybe ego,” Burry wrote in response to a question from a reader who asked why he decided to short Nvidia instead of Oracle. He did not disclose details about the puts.
The sentiment comes after a tumultuous year for Oracle’s stock price. The company’s stock price rose 36% in a single day in September after the company made optimistic forecasts for its cloud business, indicating a surge in demand related to artificial intelligence. However, those gains quickly evaporated as investors focused on rising capital expenditures, issues with the structure of some cloud deals, and rising debt loads related to data center expansion. Oracle’s performance this year is about 40% below its peak in September.
Oracle has approx. $95 billion The outstanding debt makes it the largest corporate issuer outside financials in the Bloomberg Advanced Index. The company did not immediately respond to a request for comment outside regular business hours.
Burry, who is best known for betting against the U.S. housing market during the 2008 financial crisis, said he avoided shorting big tech companies whose businesses went well beyond artificial intelligence, citing meta platform Inc., Alphabet Inc. and Microsoft Take the company as an example.
“If I’m short Meta, I’m also short its social media and advertising dominance. If I’m short Alphabet, I’m also short Alphabet Google Search in all its forms, Android, Waymo, and more. If I short Microsoft, I’m shorting a global office productivity SaaS giant. “These major companies are not purely shorting AI,” Burry wrote. “
Over time, he said, the companies are likely to rein in spending, absorb losses from overcapacity and potentially write down assets while maintaining dominance in their core businesses. “These three people are not going away,” he added.
He said he would short OpenAI at a $500 billion valuation, underscoring his widespread doubts about the speed and economics of building artificial intelligence.
Burry described Nvidia as the most concentrated way to express a bearish view on the AI industry.
“Nvidia is also the most popular and least skeptical,” he wrote. “So it’s cheap to short it, and its puts are cheaper than some of the other big shorts that have been questioned more.”