Short seller Burry reduced his hedge against a rise in Nvidia’s stock price—following a rally worth $442 billion

Following Nvidia’s earnings report, Michael Burry sold half of his position in the company’s call options. The well-known short seller, the protagonist of the film *The Big Short*, had opened the position less than a day earlier to hedge against a potential rise in the company’s stock price. According to Burry, the options have risen in price by 50–60% during that time and have served their purpose. During trading on August 27—the first session following the release of the second-quarter earnings report—Nvidia’s stock price jumped 8.7%. However, the investor emphasized that his long-term “bearish” view on the chipmaker has not changed.

Burry announced the reduction of his short position on his Substack blog on August 27. The day before, on the same platform, he announced that he had purchased December Nvidia call options with strike prices around $250–290 to hedge against a potential spike in the stock price following the release of quarterly earnings. The investor considered the market’s reaction to be virtually unpredictable and compared it to flipping a coin, even though Nvidia’s stock had fallen in the next trading session following each of the last four earnings reports. The call options were intended to limit losses on his bet that the company’s stock would fall. This position accounts for about 3.5–4% of his portfolios.

Burry added that he will likely sell the remaining half of his Nvidia call options today, as he sees no reason to continue holding them. At the same time, the investor acknowledged that the company’s stock price may continue to rise.

“I acknowledge that there is little standing in the way of further stock gains right now. Of course, the report does not call my long-term view into question, and some specific events even confirm it. However, nothing that could deal a decisive blow to the ‘bullish’ scenario has happened yet, so it could persist for a very long time,” wrote the short seller.

Burry has long held a "bearish" view on Nvidia. He believes the market is too confident that the current pace of AI chip purchases will continue for many years to come, even though this investment cycle could end much sooner. A significant portion of the demand for the company’s graphics processors is tied to the large-scale construction of AI infrastructure, and if capital expenditures by hyperscalers slow down, Nvidia’s orders could quickly decline.

Furthermore, according to Burry, Nvidia’s largest customersare taking too long to write off their expenses for chips and servers. Companies calculate the depreciation of such equipment over 5–6 years, although, according to the short seller, it becomes obsolete in just 2–3 years due to the rapid release of new generations of chips. As a result, companies write off a smaller portion of the equipment’s cost each year, making their reported profits appear higher. In 2025, Burry projected that Meta, Alphabet, Microsoft, Amazon, and Oracle would collectively underestimate their depreciation by approximately $176 billion in 2026–2028.

Back in July, the investor wrote that he was continuing to increase his short position against Nvidia, even though, of all his major short positions at the time, this particular one was losing money. In early August, Burry confirmed that his view had not changed and, in effect, extended his bet on a significant decline in the stock price. At that time, the investor wrote that he was confident in his assessment of the company for the next few years.

On August 11, Burry once again ramped up his bet against Nvidia: he bought additional put options expiring in December 2026 and June 2027 with strike prices around $100. On the same 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. For Burry, this deal was further confirmation that demand for Nvidia’s hardware is increasingly dependent on borrowed money.

This article was AI-translated and verified by a human editor