Investor Michael Burry Places $1.1 Billion Bet Against AI Stocks as Markets Slide
Nasdaq 100 futures were pointing lower this morning after the index fell 2 % yesterday, extending a broad sell‑off in technology shares that began late last week. The decline follows a $1.1 billion short position taken by Michael Burry, the hedge‑fund manager famously portrayed in the book and film *The Big Short*, who has bet against a group of artificial‑intelligence‑focused companies.
The sell‑off has been driven by a combination of factors, including concerns that AI‑related valuations have become detached from underlying earnings, a slowdown in corporate spending on cloud services, and broader macro‑economic pressures such as higher interest rates. Leading AI‑driven stocks in the Nasdaq 100 were among the hardest hit, with several losing more than 5 % in a single session, while the broader index has struggled to regain momentum.
Burry, whose firm Scion Asset Management has previously profited from bets on housing market declines, explained the rationale behind the trade in a brief filing to the Securities and Exchange Commission. He cited “over‑optimistic growth expectations for AI companies and a tightening monetary environment” as key reasons for the position. Industry analysts note that while Burry’s move is sizable, it represents a relatively small fraction of the total market exposure to AI, and that other investors continue to pour capital into the sector.
Market participants have responded with a mix of caution and curiosity. Some investors view the short as a warning signal that could prompt a reassessment of AI valuations, while others argue that the sector’s long‑term growth prospects remain strong despite short‑term volatility. Regulatory bodies have not commented on the specific trade, but they continue to monitor heightened market activity in emerging technology stocks.
Looking ahead, the trajectory of AI stocks will likely hinge on earnings reports, guidance from major technology firms, and the pace of monetary policy adjustments. If earnings fail to meet the lofty expectations set earlier this year, the downward pressure on AI equities could intensify, potentially validating Burry’s bet. Conversely, stronger-than‑expected performance could trigger a rapid rebound, underscoring the inherent risk of large‑scale short positions in a fast‑evolving sector.
