Investor Michael Burry has exited his entire position in GameStop and sharply increased bearish wagers against some of the market’s biggest artificial intelligence and semiconductor names, arguing that excessive leverage, speculative valuations, and euphoric investor sentiment are creating conditions similar to past market bubbles.
The investor, whose successful bet against the U.S. housing market collapse was chronicled in the book and film The Big Short, disclosed the moves in a series of posts published Monday on his Substack.
Burry said he abandoned GameStop after concluding that chief executive Ryan Cohen’s proposed $56 billion bid for eBay fundamentally undermined what he had previously described as the company’s “Instant Berkshire” strategy, a vision in which GameStop could evolve into a diversified capital allocator modeled after Berkshire Hathaway.
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“I sold my entire GME position,” Burry wrote, describing it as the first full position he has exited since shifting away from running a hedge fund toward publishing investment commentary online late last year.
“Any which way I sliced it, the Instant Berkshire thesis was never compatible with >5x Debt/EBITDA, never ok with interest coverage under 4.0x,” he added.
Burry had previously ranked GameStop among his three largest holdings alongside JD.com and Molina Healthcare, together accounting for more than one-third of his disclosed personal equity portfolio.
His latest comments underscore mounting concern among some investors that GameStop’s attempted transformation under Cohen is veering away from the balance-sheet discipline that helped fuel enthusiasm around the stock following its meme-stock resurgence years ago.
Burry argued that the proposed eBay acquisition could saddle the combined company with dangerously high leverage at a time when borrowing costs remain elevated and consumer-facing retail businesses are already under pressure from slower spending and intensifying competition from giants such as Amazon.
According to Burry’s calculations, the proposed deal would leave the merged entity carrying a net-debt-to-profit ratio of roughly 5.2 times, while annual profits would cover interest expenses by only 2.5 times. He warned that if eBay demanded a higher price closer to $65 billion, leverage could climb to 7.7 times, with profit-to-interest coverage falling toward distressed territory.
“Leverage above 5 times was a knife edge,” Burry wrote in an earlier post. “A level of debt that borders on distressed.”
He dismissed the acquisition strategy as unoriginal and financially dangerous.
“If GameStop wants to do it with billions of interest expense and all manner covenants restricting its movements, it will not be breaking new ground,” he wrote previously. “It will be trotting in well-worn ruts on the road to capitalist Hell.”
The comments represent one of the harshest public critiques yet of Cohen’s attempt to reposition GameStop beyond its struggling core video game retail business. Cohen, who built his reputation through pet products retailer Chewy, has increasingly sought to portray GameStop as a long-term investment vehicle rather than a traditional retailer.
Also, Burry significantly expanded his bearish bets against the artificial intelligence sector, targeting companies that have become major beneficiaries of Wall Street’s AI-driven rally. He disclosed an outright short position in Palantir Technologies ahead of the company’s earnings release, saying his concerns extended beyond valuation alone.
“I am shorting the business model. I am shorting the entire premise upon which the company rests. I am shorting the CEO,” Burry wrote.
Palantir has emerged as one of the biggest winners of the AI boom, surging roughly 800% since the start of 2024 and reaching a market capitalization of about $350 billion. The company has benefited from investor optimism surrounding government contracts, defense applications, and demand for AI-powered analytics platforms.
But Burry’s attack highlights a widening divide between bullish investors betting AI will transform enterprise software and skeptics who believe valuations have detached from underlying fundamentals.
The investor also increased put-option positions against the SOXX, which tracks major chipmakers including Nvidia, Advanced Micro Devices, Broadcom, Micron Technology, and Intel.
“What a rally, a true cherry on top of a decade+ explosive run,” Burry wrote. “I am happy being short every single one of those names at current valuations and at this stage of the cycle.”
He also disclosed fresh bearish positions against the QQQ, which tracks the tech-heavy Nasdaq-100 index, as well as new put options on Nvidia.
“Nvidia remains one of the cheaper ways to short the AI data center bubble because of the continued near-unanimous positive view of Wall Street,” he wrote.
Burry said the options were structured with strike prices well below current trading levels and expirations extending into next spring, signaling expectations of a potentially sharp correction in AI-related equities over the coming months.
Combined, his bearish options positions tied to SOXX, QQQ, Palantir, Nvidia, and Oracle account for nearly 7% of his portfolio, while direct short positions in Palantir and Tesla make up another 2.5%.
The moves come at a time when enthusiasm surrounding AI infrastructure, data centers, and semiconductor demand has propelled technology stocks to record highs, even as some analysts warn that expectations are beginning to resemble prior speculative manias.
Burry’s latest positioning suggests he believes the market’s AI euphoria, much like the housing bubble he famously bet against nearly two decades ago, is entering a more dangerous late-cycle phase where lofty narratives are overwhelming traditional valuation discipline.