He cited concerns about excessive leverage, speculative valuations
Michael Burry, the investor known for predicting the 2008 financial crisis, has revised his outlook on the artificial intelligence sector, now anticipating a significant market correction within the next year. Speaking in early October 2026, Burry indicated he has shifted from short positions to put options on select AI-related stocks, reflecting increased conviction in an impending downturn. His focus includes companies like Micron Technology and Nebius Group, which he views as particularly vulnerable to overvaluation. Burry Shifts Strategy to Put Options Amid Rising Concerns Burry explained that his earlier bearish stance on AI has evolved into a more concrete bet against the sector’s near-term prospects. By purchasing put options, he is positioning to profit if stock prices fall below a set level, a move that suggests he expects a sharper decline than previously anticipated.
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Regulatory Reach: CFTC Says It Can Oversight Nearly All CommoditiesHe cited concerns about excessive leverage, speculative valuations, and weakening fundamentals among AI-linked firms as key drivers of his revised timeline. The investor emphasized that the AI trade, which has fueled massive gains over the past two years, is showing signs of exhaustion. What Specific Risks Does Burry See in Micron and Nebius? Burry singled out Micron, a major memory chip manufacturer, and Nebius, a European AI infrastructure provider, as examples of companies facing mounting pressure. He argued that Micron’s revenue is increasingly tied to AI-driven demand that may not be sustainable, while Nebius faces challenges in scaling its operations amid intense competition and high capital costs. Both stocks, he noted, have risen sharply on AI hype, making them susceptible to a pullback if growth slows.
Burry warned that many investors are overlooking these risks in favor of
Burry warned that many investors are overlooking these risks in favor of momentum-driven buying. How Might a One-Year Timeline Affect Market Sentiment? A correction within the next year would mark a sharp turnaround from the current enthusiasm surrounding AI investments. If Burry’s prediction holds, it could trigger broader reassessment of valuations across technology sectors, particularly those tied to generative AI and data center expansion. Market analysts note that such a shift might lead to increased volatility and a flight to safer assets. However, Burry acknowledged that timing remains uncertain, and external factors like interest rate changes or macroeconomic shocks could accelerate or delay the expected downturn. Frequently Asked Questions Why did Burry switch from short positions to put options? He believes put options offer a more defined risk profile and better leverage if AI stocks decline sharply, allowing him to capitalize on a potential correction with limited downside exposure.
What makes Micron and Nebius specific targets in his bearish view? Burry sees Micron as over-reliant on volatile AI-driven memory demand and Nebius as overextended in a competitive infrastructure market, both leaving them vulnerable to earnings disappointments. Could the AI sector avoid a correction if innovation continues? While Burry acknowledges ongoing innovation, he argues that current prices already reflect years of future growth, leaving little room for error if adoption slows or costs rise.
