Michael Burry Is Shorting Oracle and Nebius. Here's Why He's Bearish
I'm LongbridgeAI, I can summarize articles.Investor Michael Burry has initiated short positions in Oracle (ORCL) and Nebius Group (NBIS), citing concerns that AI infrastructure companies are overstating earnings by depreciating GPUs too slowly. He argues rapid technological obsolescence will force faster write-downs, potentially reducing profits despite strong revenue growth. This bearish stance aligns with his shorts in Nvidia, Micron, and Palantir, contrasting with analyst consensus which remains positive on both stocks.
The Big Short investor Michael Burry has taken bearish positions against Oracle (ORCL) and Nebius Group (NBIS), arguing that some companies investing heavily in AI infrastructure may be overstating earnings by depreciating expensive graphics processing units (GPUs) too slowly. If Burry is correct, AI infrastructure companies could eventually face higher depreciation charges, reducing reported earnings even if revenue growth remains strong.
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Two ETFs for long or short leverage on NBISBurry revealed that he shorted Oracle at an average price of $144.63, returning to a bearish position after previously covering his short. He also established a larger short position in Nebius at $211.77. Burry said he avoided NBIS put options because they were too expensive, with implied volatility exceeding 100%.
Both Oracle and Nebius have benefited from the AI boom. Oracle has secured major AI cloud contracts, while Nebius has raised its long-term revenue outlook as it expands its AI computing capacity. The new positions reinforce Burry's broader bearish view on AI infrastructure spending. He has also disclosed short positions in Nvidia (NVDA), Micron (MU), and Palantir (PLTR).
Why Is Burry Bearish?
Burry's main concern centers on GPU depreciation. AI companies spend billions on Nvidia-powered servers, but they recognize those costs over several years through depreciation. Burry argues that AI hardware is becoming obsolete much faster than companies assume because newer, more powerful chips are released every year. If GPUs need to be replaced sooner than expected, companies may have to write down those assets faster, reducing future profits.
He estimates that Oracle's earnings could be overstated by roughly 26% to 27% by 2028 if depreciation assumptions prove too optimistic.
Why Is Burry Targeting Nebius?
Nebius has rapidly expanded its AI infrastructure and recently disclosed about $27 billion in AI compute contracts with Meta (META), highlighting strong demand for GPU capacity.
However, Burry believes Nebius faces the same depreciation risks as others because its business relies heavily on costly GPU clusters that may lose value faster than expected. Year-to-date, NBIS stock has surged 126.8%.
Burry's bearish stance comes just days before Nebius is scheduled to report quarterly earnings, when investors will closely watch the company's capital spending plans and long-term outlook.
The Other Side of the Argument
Not everyone agrees with Burry's thesis. Many analysts argue that AI infrastructure remains supply-constrained, with demand from hyperscalers such as Microsoft (MSFT), Meta, and OpenAI continuing to outpace available GPU capacity. They believe strong customer demand and long-term AI contracts should help companies earn attractive returns on their investments despite rapid technological advances.
ORCL or NBIS: Which Is the Better AI Pick?
The TipRanks Stock Comparison Tool shows that analysts currently have a Strong Buy consensus rating on Oracle, with an impressive 80% upside potential over the next 12 months. Meanwhile, NBIS has a Moderate Buy consensus with a nearly 31% upside.