Big Short investor Michael Burry is standing by his bearish view on the stock market regardless of a string of blockbuster earnings from the world’s biggest technology companies. In a recent Substack post, the famed investor warned that markets could be heading for “a 1987-type fall,” saying high valuations, massive AI spending and rising leverage have created conditions similar to those seen before major market crashes.
Burry has repeatedly stated that the AI-driven rally is becoming unsustainable and has pushed several of Wall Street’s biggest stocks to expensive levels. His warning has attracted attention because it comes just as investors have been cheering strong quarterly results from big tech firms.
Why Burry is comparing today’s market to 1987
The 1987 “Black Monday” crash saw the S&P 500 plunge more than 30% before it took nearly two years to recover. The crash is linked to stretched stock valuations and weakening confidence in the US dollar.
Burry believes some of those warning signs are showing up again in 2026. Technology stocks have surged on AI optimism, but many investors are still waiting to see whether companies will earn enough from AI to justify the huge amounts they are spending on it. At the same time, central banks have been buying more gold while reducing exposure to the US dollar and Treasury bonds, adding to concerns about confidence in US assets.
Strong tech earnings have not changed his mind
Burry’s latest warning came after several of the world’s biggest technology companies reported better-than-expected quarterly results and gave strong forecasts.
Reacting to the excitement around AI, Burry wrote on X that “there’s really gold in them thar hills,” but warned people not to forget the “ghost towns” left behind after every gold rush. The comment appeared to refer to Nvidia, which is often called the “shovel seller” of the AI boom because its chips power many AI systems.
More people are questioning the AI boom
Burry is not the only one raising concerns about AI. Technology companies have been spending billions of dollars on AI infrastructure, reducing the free cash flow they once generated. That has raised questions about how long they can keep investing at this pace.
Those concerns grew after SpaceX and Meta reportedly started renting out computing power, with Anthropic becoming a customer. The move has raised fresh questions about whether there will be enough demand for all the AI infrastructure being built.
Burry says leverage is adding to the risk
Burry believes the market rally is being driven by a cycle that feeds on itself. As volatility falls and stocks keep rising, many investment funds automatically increase their exposure, adding more leverage and pushing prices even higher. Even so, Burry made it clear that short selling is not for everyone. “I must short. Most should not,” he wrote.
Burry said he continues to hold short positions in Micron, Nvidia, the iShares Semiconductor ETF (SOXX), Caterpillar, Tesla, Palantir and Applied Materials. He said he remains confident in these bets over the long term, although he would cut his losses if the trades moved decisively against him. According to Burry, every one of those positions is currently profitable except his short bet against Nvidia.
Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a registered financial advisor in the respective jurisdiction.