Burry’s Nvidia calls gained 50% to 60% in under a day after the stock rallied about 9%.
- He sold half the NVDA calls, saying they “did their job,” but remained “long-term bearish” on Nvidia.
- Burry’s long-dated Microsoft calls benefited as the stock surged more than 15% after strong quarterly results.
- He remains bearish on AI capex, warning excessive investment could eventually cause “shocking reductions in earnings.”
Michael Burry thanked veteran tech journalist Tae Kim after the columnist praised “The Big Short” investor for reportedly making “a killing” on Nvidia (NVDA) and Microsoft (MSFT) calls placed ahead of earnings.
Burry Scores On NVDA, MSFT Trades
“I find it hilarious that Michael Burry made a killing long Microsoft and Nvidia calls into earnings prints the past month,” Kim said on X. “Nice trades, Mike!”
Burry did not disclose his combined profit from the two positions. However, he said his Nvidia calls appreciated between 50% and 60% in less than a day. “Thank you, Tae, and congratulations on the success of your Substack. Love to see it,” Burry replied on Thursday.
Kim is a senior tech writer at Barron’s and the author of “The Nvidia Way.” He previously served as Bloomberg Opinion’s U.S. technology columnist and held roles at CNBC and Yahoo Finance. Earlier in his career, he worked as an equity analyst at hedge funds and an investment analyst at a fund of funds.
Burry’s Nvidia Hedge Pays Off
Burry bought December Nvidia calls shortly before the chipmaker reported second-quarter (Q2) results on Wednesday. The contracts carried strikes in the mid-to-high $200s and single-digit premiums. The calls were not a bullish stance. Burry called them protection for a much larger bearish position, saying their cost was “entirely offset” by his shorts and puts. Nvidia puts alone accounted for 3.5% to 4% of his portfolio.
At the same time, he added to short positions in Nvidia, Oracle, Palantir, Nebius and Caterpillar. His short-stock exposure, excluding puts, exceeded 21% of the portfolio. Burry called Nvidia’s earnings setup “a coin toss” but expected the company to produce “lights out” results accompanied by another wave of FOMO.
Nvidia reported $96.2 billion in quarterly revenue, more than double the year-earlier total, and beat earnings expectations. Its shares jumped about 9% on Thursday. Burry sold half his call position less than 24 hours after opening it, locking in a 50% to 60% gain.
“They did their job,” he said, adding that he might sell the remainder because he had “no good reason to keep them.” While remaining “long-term bearish,” Burry acknowledged there was “little standing in the way of further stock appreciation” in the near term.
Microsoft Surge Lifts Burry’s Calls
Burry’s Microsoft position was a longer-term bet rather than a short-lived earnings hedge. He disclosed in June that he had purchased calls expiring on Dec.15, 2028, with strikes in the low $700s while Microsoft traded in the mid-$350s. Burry said $350 was a good level to buy the stock, but he chose deeply out-of-the-money LEAP calls because they appeared “inexpensive” relative to his multi-year outlook.
Microsoft reported fourth-quarter results on July 29, with Azure revenue rising 43% and exceeding expectations. The broader results beat estimates, while the company’s capital-spending outlook avoided the negative surprise investors feared. The stock surged more than 15% in the next session, recording its strongest session in nearly 18 years and increasing the value of calls held through the report.
AI Bear Plays Both Sides
Burry has remained bearish on the AI capex trade since late last year. His publicly discussed bearish positions have included Nvidia, Palantir, Oracle, Nebius, Micron, Caterpillar and the iShares Semiconductor ETF.
His concerns include customer concentration, circular financing, aggressive depreciation assumptions, large non-cancellable manufacturing commitments and the risk that a temporary rush to build AI training capacity is being treated as permanent demand.
Burry has called Nvidia “wildly undervalued” when judged by a simple price-to-earnings multiple for a monopoly-like growth business. Yet he says that the stock’s price is “not congruent with the market’s narrative” and places its theoretical value “much lower.” He also expects Nvidia to keep investing “into and through the top of the bubble,” potentially setting the stage for “shocking reductions in earnings” when AI spending slows.
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