Investor Michael Burry is converting short positions on major artificial intelligence and semiconductor stocks into put options, a shift that signals he expects the AI investment boom to collapse before next summer. Burry, who predicted the 2007 – 2009 housing crash, stated in a recent newsletter that he is accelerating his bearish timeline on the sector. "Fundamentally, I am moving timelines up," he wrote, explaining that options provide tighter leverage as the potential downturn draws nearer.

The portfolio adjustments target several high-profile names. Burry swapped his short positions in Micron and Nebius for put options expiring in June, with strike prices set at the $500 range and double-digit levels respectively. He also replaced a short position in the SOXX iShares Semiconductor ETF with September 2027 puts in the low $400s. A similar roll occurred for Palantir, where he enlarged a put position expiring in September 2027 in the low $100s.

The move aligns with recent analysis from Ares Management, which warned that corporate reliance on unproven AI revenues carries substantial risk. According to the research, a single quarter of weaker-than-expected AI earnings could trigger an immediate shift in corporate spending. Boards would likely redirect capital away from AI projects toward higher-conviction opportunities, a transition already accounted for in current legal agreements.

Despite these warnings, the broader market has continued its upward trajectory. The Nasdaq Composite recently reached a record high, and equities have generally ignored past bearish signals. Burry previously compared the current stock market environment to the final months of the 1999-2000 dot-com bubble in May. Nevertheless, several tech stocks are already showing signs of fatigue, with Micron trading 16% below its record peak and Palantir sitting roughly 10% under its all-time high.

Supply dynamics in the memory chip sector also support a potential slowdown. Burry pointed to comments from Acer CEO Jason Chen, who noted that expanding Chinese manufacturing capacity will restore natural cycles to the industry. "How could there be a continuous shortage? China's production capacity has been consistently increasing, and there is absolutely no shortage issue. Contract prices are currently fluctuating at a high level, with some prices going up and others down," Chen stated. The data suggests the hardware market is approaching a saturation point that could accelerate the broader sector correction.