Burry is betting against Nvidia again. Why does he see echoes of 2005?
An investor known for the movie *The Big Short* has increased his bet on a decline in the company's stock price, in part because Nvidia's chip purchases are becoming increasingly dependent on borrowed funds
Burry bought additional put options on Nvidia shares, betting on a decline in the stock price / Photo: Sudarsan Thobias / Shutterstock.com
Michael Burry, whose successful strategy in the run-up to the 2008 crisis formed the basis for the book and film *The Big Short*, has increased his bet on a decline in Nvidia’s stock price. He is concerned that purchases of Nvidia chips may require about $500 billion in financing from Wall Street banks. For the investor, this is one sign that the growth in demand is increasingly reliant on borrowed capital.
Details
Burry purchased additional put options on Nvidia shares expiring in December 2026 and June 2027, with a strike price of approximately $100. The investor announced the transactions on his blog, Cassandra Unchained, on August 11. On that day, Nvidia reached an agreement with six Wall Street giants, including BlackRock and Goldman Sachs, to provide $500 billion in financing for companies purchasing its chips.
In analyzing this deal, Burry draws a parallel with how the market situation unfolded in 2005–2006, before the mortgage crisis. At that time, Goldman Sachs faced high risks due to $3 billion in mortgage-backed securities on its balance sheet. The bank managed to quickly offload these securities, but in 2006, other market participants faced the same difficulties. This subsequently led to the collapse of Merrill Lynch, Burry noted.
“Credit transactions are a normal part of the financial system. Concerns arise when artificial financing schemes emerge, designed to prop up growth in the late stages of a bull market. And further increases in leverage are presented as if opposing them were ‘un-American.’ Well, we’ll see.”
Other Bets by Burry
Burry also reported that he had increased his short positions in Palantir, Caterpillar, Oracle, and the semiconductor sector. For Palantir, he bought additional put options for December 2026 and March 2027 with strike prices around $100, and also increased his short position in the company’s stock at $175. The investor increased his short position in Caterpillar at $844, noting that the company’s data center plans are already becoming outdated. He opened an additional short position in Oracle at $145 and in the iShares Semiconductor ETF at $533.
Burry continues to buy shares of Molina Healthcare. He purchased additional shares at $198, and this position is now once again among the largest in his portfolio. The investor remains confident in the company's long-term prospects.
This article was AI-translated and verified by a human editor
