Investor Michael Burry Discloses Options Position Betting Against Oracle

Michael Burry Takes Aim at Oracle with Bearish Bets

Photographer: Jim Spellman/WireImage

Michael Burry, renowned for his critical stance on the recent surge in artificial intelligence, has set his sights on Oracle Corp., taking a negative position against the company.

In a recent Substack post published after the markets closed on Friday, Burry disclosed that he holds put options on Oracle stock. These financial instruments typically gain value when the underlying stock price declines. Over the past six months, Burry has also directly shorted Oracle shares, adding to his previously revealed bearish positions against AI-focused companies like Nvidia Corp. and Palantir Technologies Inc.

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Oracle, traditionally recognized for its database solutions, has recently made significant investments to expand its cloud computing operations. This strategic shift has required substantial spending on new data centers, resulting in a considerable increase in the company’s debt.

Responding to a reader’s question about his decision to bet against Nvidia rather than Oracle, Burry commented, “I’m not comfortable with Oracle’s current direction or the investments it’s making. These moves seem unnecessary, and I’m unsure of the motivation—perhaps it’s driven by ego.” He did not provide specifics regarding his put option holdings.

Oracle’s stock experienced a turbulent year, soaring by 36% in a single day in September after the company issued an optimistic outlook for its cloud division, fueled by AI demand. However, those gains were short-lived as concerns mounted over rising capital expenditures, the structure of cloud contracts, and the company’s growing debt from data center expansion. By year’s end, Oracle’s share price had dropped roughly 40% from its September high.

With approximately $95 billion in outstanding debt, Oracle stands as the largest non-financial corporate borrower in Bloomberg’s high-grade index. The company did not immediately provide a comment outside regular business hours.

Burry, who rose to prominence for his prescient bet against the US housing market during the 2008 financial crisis, noted that he avoids shorting major technology firms with diversified business models, such as Meta Platforms Inc., Alphabet Inc., and Microsoft Corp.

He explained, “Shorting Meta means betting against its dominance in social media and advertising. With Alphabet, it’s not just AI, but also Google Search, Android, Waymo, and more. As for Microsoft, it’s a global leader in office productivity software. These giants aren’t pure AI plays.”

Burry’s Broader Perspective on Tech Giants and AI

According to Burry, these large tech companies are likely to scale back spending over time, absorb any losses from excess capacity, and may eventually write down some assets, but they will continue to lead in their respective markets. “These three are here to stay,” he emphasized.

Burry also stated that he would consider shorting OpenAI if its valuation reached $500 billion, reflecting his skepticism about the rapid growth and profitability of the AI sector.

He described Nvidia as the most direct way to take a bearish stance on the AI trend, noting, “Nvidia is both highly favored and rarely questioned. That makes shorting it relatively inexpensive, with put options costing less than those for other major companies that face more skepticism.”

Oracle did not immediately respond to requests for comment, as previously noted.

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