Investor Michael Burry reveals options bet against Oracle

Burry owns put options on Oracle shares, he said in a Substack post after markets closed on Friday. The value usually increases as the price of the underlying asset decreases. Puri, who revealed bearish bets against AI chipmaker Nvidia Corp, said: and Palantir Technologies Inc. In November, he also sold outright to Oracle within the past six months.

Oracle is best known for its database software, but has recently pushed aggressively into cloud computing services, which requires an expensive build-out of data center capacity, and for which it takes on significant debt.

“I don’t like the way it’s positioned or the investments you’re making. You didn’t need to do what you’re doing, and I don’t know why you would do it,” Puri wrote in response to a reader who asked him why he decided to bet against Nvidia and not Oracle. He did not reveal details about the put options.

This opinion comes after a volatile year for Oracle shares. The stock jumped 36% in one session in September after the company issued an upbeat forecast for its cloud business, indicating rising demand related to artificial intelligence. But those gains quickly faded, as investors focused on rising capital expenditures, questions about the structure of some cloud deals and the ballooning debt load associated with the expansion of data centers. Oracle ended the year about 40% below its peak in September.

Oracle has about $95 billion of outstanding debt, making it the largest issuer of companies outside the financial sector in the Bloomberg High-Quality Index. The company did not immediately respond to a request for comment outside normal business hours.

Perry, who famously bet against the US housing market during the 2008 financial crisis, said he avoided selling big technology companies whose businesses extend beyond artificial intelligence, citing Meta Platforms Inc. and Alphabet Inc. and Microsoft Corp as examples.

“If I shorten Meta, I also shorten its dominance in social media and advertising. If I shorten Alphabet, I shorten Google Search in all its forms, Android, Waymo, etc. If I shorten Microsoft, I shorten the productivity of the global SaaS giant’s offices,” Perry wrote. “Big things aren’t just shorts in AI.”

These companies are likely to rein in spending over time, absorb losses from overcapacity and possibly write down assets, while remaining dominant in their core businesses, he said. He added: “These three will not leave.”

He said he would sell OpenAI at a valuation of $500 billion, underscoring his broader skepticism about the pace and economics of building AI.

Puri described Nvidia as the most focused way to express a bearish view on AI trading.

“NVIDIA is also the most popular and least suspicious,” he wrote. “So short selling is cheap, and his shorting is cheaper than some of the other big shorts out there that are more questionable.”