Big Short's Burry Bets Against Oracle on AI Spend, Debt Concerns

Burry Targets Oracle Amidst AI Spending Spree

Michael Burry, the investor immortalized in 'The Big Short,' has revealed a significant bearish position against Oracle Corp. In a Substack post Friday, Burry disclosed ownership of put options on Oracle shares, signaling a bet that the technology firm's stock price will decline. Puts typically gain value as the underlying asset's price falls.

This move follows Burry's earlier public bearish calls on AI-focused companies like Nvidia Corp. and Palantir Technologies Inc. He explicitly stated he had also shorted Oracle directly over the past six months. Burry expressed strong reservations about Oracle's current strategy, particularly its substantial investments in cloud-computing infrastructure and the associated debt.

Strategic Doubts Surface

Oracle, historically known for its database software, is undergoing an aggressive push into cloud services. This expansion necessitates considerable data center capacity build-out, financed by significant debt. Burry voiced his disapproval, writing, "I do not like how it is positioned or the investments it is making. It did not need to do what it is doing, and I do not know why it is doing this. Maybe ego."

Oracle's stock experienced a dramatic 36% surge in September on optimistic cloud business forecasts tied to AI demand. However, these gains proved ephemeral as investors began focusing on the escalating capital expenditures, deal structures, and a ballooning debt load. The company now carries approximately $95 billion in outstanding debt, positioning it as the largest non-financial corporate issuer in the Bloomberg high-grade index.

Contrasting Views on Tech Giants

Burry differentiated his approach toward Oracle and other tech giants like Meta Platforms Inc., Alphabet Inc., and Microsoft Corp. He indicated he avoids shorting these larger companies because their businesses encompass far more than just AI. He argued that shorting Meta means shorting social media and advertising dominance; shorting Alphabet means shorting Google Search, Android, and Waymo; and shorting Microsoft means shorting a global SaaS giant. These diversified giants, he believes, are better positioned to absorb AI-related costs and potential asset write-downs while maintaining core business strength.

Burry specifically pointed to Nvidia as the most concentrated way to express a bearish view on artificial intelligence. He noted Nvidia is also the "most loved, and least doubted," making its puts relatively cheaper for expressing a bearish sentiment. He also reiterated skepticism about the economics of the AI buildout, referencing a hypothetical short on OpenAI at a $500 billion valuation.