He's sticking to a bearish chip bet
Michael Burry warns of echoes of 1987 after the S&P 500 reached a new record high.
Among those weighing in on the S&P 500's first closing high in 42 sessions, was Michael Burry, the investor famed for predicting the housing market crash and portrayed in "The Big Short."
"I continue to believe it is possible we are near a major top, and possible a 1987-type fall, but the S&P 500 making new highs will likely bring new money into the market," Burry said early Wednesday on X, in an excerpt from his Substack post.
On October 19, 1987, known as "Black Monday," the Dow Jones Industrial Average plunged 22.6%, which remains its worst-ever one-day percentage drop.
Burry said he's maintaining a bet that chip stocks will fall, via put options on the iShares Semiconductor ETF SOXX and "short position in the equity" - when an investor borrows shares they don't own and sells them in hopes of buying them back cheaper later and profiting. In late 2025, Burry's Scion Asset Management first revealed its AI-trade pessimism with short positions on Palantir Technologies (PLTR) and Nvidia (NVDA).
Even with its latest earnings-fueled rally, Palantir stock is down from when Burry disclosed in a regulatory filing in November that he was betting against the firm. Nvidia has risen in value, but not dramatically. Burry has recommended several other stock trades since then.
"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 said Wednesday. That refers to systematic strategies employed by hedge funds and other big investors who automatically buy into the market when volatility is down. However, those positions can quickly reverse if the situation changes, sending stocks lower.
The Cboe Volatility Index VIX. known as the fear index, climbed 4% to 16.5 on Tuesday, but is down 21% over the past five sessions.
In an except from his Substack, Burry referenced BTIG Research's Jonathan Krinsky, who noted the S&P 500 climbed 5% over four trading days to a new high on Tuesday, something that has only been seen three other times in the last 30 years.
"One was 3/21/00, basically at the top of the 1990s tech media telecom bubble. The other two were 4/23/99 - roughly when most silly dot coms public at the time started crashing, and 11/9/20," Burry said. He shared Krinsky's chart showing how those last two episodes weren't the best time to buy:
Burry also revealed some new positions, according to reports. He exited long positions and call options on Microsoft $(MSFT)$, closed short positions and puts on Oracle $(ORCL)$, and closed out January 2026 Palantir (PLTR) puts, though is still short that stock.
Palantir shares surged 29% on Tuesday for the biggest one-day gain since Feb. 2024 after blowout earnings. He rolled his Nvidia bearish puts into June 2027 and his Invesco QQQ QQQ short position into February 2027.
Some pushed back at his crash call, like Kip Herriage, managing partner and founder of Vertical Research Advisory, in an X post: "Barring an alien attack, in a bull market of this breadth & strength, Burry is going to see his short positions get absolutely smoked into 2027 (which is essentially how he's positioned). We're in a generational bull market that will easily 10 x dot-com results. It will run well into the 2030s."
In a self-critique of his own calls in a May Substack post, he admitted to being "a meme for the number of times I have called a crash."
"Still, I got it right in 2000, got it right in 2007. Got it right in 2019, helped by COVID, and I called the meme stock crash in mid 2021," and called the bank-stock run in 2023, he said.
Krinsky himself doesn't think the chip rally will last because he believes many investors who got burned in July will become "opportunistic sellers as prices rebound into resistance."
The markets
U.S. stock futures (ES00) (YM00) (NQ00) are mostly firmer, but tech is flat. Oil prices (CL.1) (BRN00) are rising.
Key asset performance Last 5d 1m YTD 1y S&P 500 7736.52 4.14% 3.10% 13.02% 22.82% Nasdaq Composite 26,584.99 6.87% 2.97% 14.38% 27.10% 10-year Treasury 4.616 -6.80 3.90 44.40 38.40 Gold 4217.2 3.73% 3.20% -2.65% 22.89% Oil 76.22 -9.91% 1.95% 32.76% 18.59% Data: MarketWatch. Treasury yields change expressed in basis points
The buzz
SpaceX stock $(SPCX)$ is stumbling, dogged by a lack of guidance, high capex and a big hit to average revenue per subscriber in its debut earnings.
Advanced Micro Devices $(AMD)$ results beat forecasts, but margin guidance was disappointing and shares are falling.
Pinterest (PINS) is dropping after the social-media group swung to a loss. Arista Networks (ANET) is climbing after upbeat results from the network infrastructure group.
ADP private-sector employment for July is due at 8:15 a.m., followed by the Institute for Supply Management's services PMI at 10 a.m.
Blackstone circling $36 billion debt package to back Anthropic's Google chip rentals.
The chart
Jones Trading's Michael O'Rourke wants us to pay attention to collapsing AI token prices. "In the same span that an AI rally drove the S&P 500 higher by 6%, the Silicon Data LLM Token Expenditure Index declined 7.2% and is only up 3.66% year-to-date after being up as much as 65% in May," he writes. Collapsing prices make it tough for the makers of large language models to attain profitability "and so much of this build-out is predicated on their demand."
Top tickers
These were the top-searched tickers on MarketWatch as of 6 a.m.:
Ticker Security name SPCX SpaceX NVDA Nvidia AMD Advanced Micro Devices TSLA Tesla MU Micron PLTR Palantir AAPL Apple TSM Taiwan Semiconductor Manufacturing MSFT Microsoft SNDK Sandisk
Japan's cooling solution - human refrigerators.
-Barbara Kollmeyer
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