Michael Burry pulls back on risk, says he’s happy to sit on cash. Is Big Short investor reversing his bearish AI bets?

Popular American investor Michael Burry, best known for correctly predicting the 2008 housing crisis, is now pulling back on risk across his portfolio, trimming every position and exiting some put options contracts on Nvidia and Palantir, saying he is “happy to sit on cash”.

Michael Burry, in a Substack post on Wednesday, said he is exiting December 2026 put options on Nvidia and Palantir Technologies without rolling the trades into later-dated contracts, Stocktwits reported. "This will be an interesting market this fall," Burry wrote.

Put options typically reflect a trader’s conviction that the stock price is about to fall. Burry for long has held put options on a variety of stocks which remain the face of the AI boom, spooking investors about a possible market crash when the artificial intelligence frenzy fizzles out. Now, the American investor exiting put options may spark some optimism, but Burry clarified that it was not his intention.


Also read | Cathie Wood vs Michael Burry: The $11 million Palantir bet that’s splitting Wall Street

Burry said he sold his December 2026 puts on both Nvidia and Palantir entirely to avoid rapid time-based decay. He added that he did not replace or roll the positions, saying he is "pulling back on exposures across the portfolio." He continues to hold 2027 puts on Palantir and the Invesco QQQ Trust Series 1 ETF.

Michael Burry's earlier AI warnings

Recently, Burry said he continues to believe that the market is close to a major top, warning of a similar crash to that of 1987 when Dow Jones recorded a historic 23% plunge which led to the introduction of regulatory circuit breakers. However, the market investor noted that the S&P 500 making new highs likely will bring new money into the market.

Earlier this year, Burry wrote on a Substack post that he sees many indicators, both technical and fundamental, lining up for the same conclusion as the Dotcom crash. "1999 went where no market had gone before, and I would say so can this one...It is already there on a number of indicators," he said, arguing that massive venture capital flows, rising AI debt issuance, and extreme market optimism are creating conditions where valuations may detach from economic reality.

Also read | Big Short fame Michael Burry is betting against Nvidia, AMD, Micron and other chipmakers. Is a massive AI crash coming?

Michael Burry’s 2008 prediction

Just before than 2008 financial collapse, people believed that the US housing market was secure and booming, and that home prices would not fall. Banks increasingly issued subprime loans, riskier mortgages were given to borrowers with weaker credit, under the assumption that rising prices would shield them from losses. Despite the misplaced optimism, Burry voiced his opinion that the market was on the brink of collapse, which most people did not believe.

After tirelessly studying mortgage securities, he concluded that subprime loans would collapse by 2007, taking down the broader economy with them. In 2005 and 2006, he warned his clients in letters that the meltdown was coming — but almost no one believed him.

Against all odds, Burry bought credit default swaps against subprime mortgage securities, effectively betting that the market would crash. As premiums mounted, investors grew furious and demanded withdrawals, forcing Burry to restrict redemptions in his fund in order to hold the positions.

The backlash was so intense that it nearly destroyed his firm — until the market finally collapsed exactly as he predicted. Burry made around $100 million personally and $725 million for investors when the housing market finally collapsed.

Burry’s popular bet against the housing market was depicted in the 2015 movie titled 'The Big Short', which starred Christian Bale, Ryan Gosling, Steve Carell and others.

Also read | Michael Burry revives AI warnings, Big Short investor says 'You could have heard it first'

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