Wall Street hit a milestone on Aug. 4 that would normally silence the skeptics. The S&P 500 closed at a record high for the first time since June, and the Nasdaq Composite followed.
Both were powered by stronger-than-expected corporate earnings and falling oil prices tied to hopes the Strait of Hormuz would reopen.
Michael Burry was not impressed. The investor famous for predicting the 2008 housing crash used the moment to double down on one of his most dramatic warnings yet.
Michael Burry warns of 1987-style crash at S&P 500 record high
“It is possible we are near a major top, and possible a 1987-type fall, but the S&P 500 making new highs likely will bring new money into the market,” Burry wrote in an Aug. 3 Substack post.
The S&P 500 gained 1.9% that day to close at a record for the first time since June, while the Nasdaq Composite jumped 2.7%. The equal-weight S&P 500 had already reached record levels, while the Nasdaq 100 is still some distance from its all-time high, according to CNBC.
Burry pointed to a specific mechanical risk behind the rally, rather than just valuation concerns. “Remember, the market going up on falling volatility forces vol-targeting funds to leverage up, and brings leverage from other momentum strategies into play,” he wrote, describing a feedback loop where calm markets attract more borrowed money.
He also flagged a historical pattern that caught traders’ attention. Citing data from BTIG’s Jonathan Krinsky, Burry noted the S&P 500 has surged 5% over four trading days to a new high only three times before: once in April 1999, once in March 2000, and once in November 2020, according to Stocktwits.
The first two instances clustered around the peak of the dot-com bubble. The November 2020 instance occurred during the pandemic recovery rally.
Related: Mark Cuban, Michael Burry send strong warning on Nvidia, AI stocks
His skepticism toward the artificial intelligence boom is not new. Burry has argued for months that the AI infrastructure buildout is increasingly reliant on financing arrangements that may prove unsustainable.
It’s a theme running through his most recent Substack post, where he argued that more than $1 trillion in “Byzantine financing arrangements” supporting the buildout might be insufficiently backed by actual end-user demand. He had also issued earlier warnings about earnings quality across the sector.
Burry also revealed he is working on the fourth installment of his “Heretic’s Guide,” which will examine the earnings and regulatory filings of the five largest hyperscalers through a forensic analysis. He said the analysis is largely complete, with work continuing on the visuals and final prose.
The Nvidia short in particular faces a near-term test. Nvidia is scheduled to report earnings on Aug. 26, and nearly every analyst covering the stock still rates it a buy, meaning Burry’s losing position could either widen or reverse sharply, depending on how that report lands.
Burry’s Nvidia, Palantir, and semiconductor short positions in 2026
Burry disclosed he continues to hold short positions in the iShares Semiconductor ETF, Micron, Nvidia, Caterpillar, Palantir, Tesla, and Applied Materials. All of those positions remain profitable except his bet against Nvidia, he said, and he added that he would cut losses if the trades moved decisively against him.
The bets have built gradually over the past year. Scion Asset Management’s third-quarter 2025 filing first revealed roughly $187 million in Nvidia options and $912 million against Palantir. The two bearish positions accounted for nearly 80% of the fund’s total portfolio at the time.
Burry has since added new names and adjusted existing ones. He disclosed a fresh short against Micron on July 1 at $1,051.87 per share, and later added to his Nvidia short at $210.28. He also increased his SOXX position and sold more of his Caterpillar position at $893.49, all while maintaining his Tesla and Palantir shorts, according to TheStreet.
Not every position has grown. Burry cut his Palantir short in half back in June, picking up long-dated call options elsewhere and rotating into names like JD.com, Adobe, and Fiserv.
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Why Burry is shorting AI stocks and what his depreciation thesis says
Burry’s core argument goes beyond simple valuation math. He has argued that hyperscalers may be extending the useful life of Nvidia chips and other AI computing equipment in ways that understate depreciation and artificially inflate reported earnings.
Burry estimates the resulting depreciation shortfall could reach roughly $176 billion between 2026 and 2028, according to TheStreet.
He has also questioned whether AI infrastructure demand is as organic as companies claim, pointing to circular deals where customers are effectively funded by their own suppliers, a dynamic he says blurs the picture of genuine end-customer demand, as TheStreet reported.
Not everyone agrees with the framing. Analysts have pointed out that hyperscalers keep raising capital spending rather than pulling back, while chipmakers such as Taiwan Semiconductor keep expanding capacity and building new fabs, undercutting the case for an imminent AI infrastructure slowdown.
Micron’s own results have further complicated Burry’s thesis. On the company’s fiscal third-quarter earnings call in June, Chief Business Officer Sumit Sadana said customer demand for HBM memory chips remained well above Micron’s ability to supply every product category through 2028, while CFO Mark Murphy noted that free cash flow reached a record for the company.
Michael Burry’s track record on stock market and AI predictions
Burry’s record on these calls has been mixed. His short position against the S&P 500 made in August 2023 has been a major loser. The index has gained roughly 66% since that call. His November 2025 shorts against Nvidia and Palantir performed better. He closed half of his Palantir short position roughly 30% from its highs before his partial exit.
He is also no stranger to closing funds and reopening new ones. Burry previously wound down Scion Capital before launching Scion Asset Management. He also terminated Scion’s SEC registration in 2025 while assets sat near $155 million.
For now, Burry is sticking to his message rather than his timing.
“Again, shorting is not for everyone,” he wrote. “I must short. Most should not.”
Related: Michael Burry just sent a fresh signal to stock market investors
