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Michael Burry cites 1987-style crash risk as AI-led rally lifts stocks
Burry said the S&P 500 hit its first record close since June, and he continues to hold shorts including SOXX, Nvidia and Tesla, while noting he would cut losses if trades move against him.
Michael Burry, the investor known for The Big Short, warned that the AI-driven stock rally may be near a major top and could lead to a sharp sell-off similar to the 1987 crash, even as Wall Street hit fresh highs.
In a Substack post cited by LiveMint, Burry said falling volatility can pull more money into the market through a self-reinforcing cycle, as volatility-targeting strategies increase leverage and momentum approaches add exposure.
LiveMint reported that the S&P 500 jumped 1.9% Tuesday to its first record close since June. More than 80% of S&P 500 companies beat analysts' earnings expectations for the last quarter, according to LSEG data. The Dow rose 907.47 points, or 1.71%, to 54,085.88, while the Nasdaq Composite gained 671.10 points, or 2.59%, to 26,584.99.
Burry said he continues to hold short positions in the iShares Semiconductor ETF (SOXX) and in companies including Micron, Nvidia, Caterpillar, Palantir, Tesla and Applied Materials. He said all positions remain profitable except his bet against Nvidia, and he added he would cut his losses if the trades moved decisively against him.
Latest closeS&P 500 7,736.52 ▲1.8%|Nasdaq Comp. 26,584.99 ▲2.6%|Dow Jones 54,085.88 ▲1.7%