Michael Burry believes the latest rally in US equities may be approaching a critical turning point, warning that current market conditions could eventually produce a selloff comparable to the 1987 crash. His cautious outlook contrasts sharply with Wall Street’s continued advance, as the S&P 500 returned to record territory on Tuesday.
He confirmed that he remains short Nvidia, Tesla, Palantir and several other companies exposed to the artificial intelligence investment boom.
Burry Warns the Market May Be Near a Peak
The S&P 500 advanced 1.79% on Tuesday to close at a record 7,736.52, while the Nasdaq Composite climbed 2.59% to an all-time high of 26,584.99.
The rally was supported by stronger-than-expected corporate earnings and falling oil prices. Crude declined as investors assessed the possibility of renewed shipping through the Strait of Hormuz, easing concerns about energy supplies and inflation.
Despite the positive market backdrop, Burry argued that demand for AI infrastructure remains heavily dependent on continued access to capital and strong cash flows. Should those funding conditions weaken, companies exposed to the AI spending cycle could come under significant pressure.
His latest comments followed an earlier warning on June 30, when he compared the rapid expansion of AI-related valuations to a speculative bubble.
Burry also noted that record highs often attract additional capital into equities. At the same time, declining volatility can encourage systematic and algorithmic funds to increase leverage, potentially making the market more vulnerable to a sudden reversal.
Nvidia Stands Out as Burry’s Only Unprofitable Short
Burry said he continues to hold bearish positions against the iShares Semiconductor ETF, as well as Micron Technology, Nvidia, Caterpillar, Palantir, Tesla and Applied Materials.
According to his disclosure, all of those positions were profitable except for the trade against Nvidia.
That position could face a major test when Nvidia reports quarterly earnings on Aug. 26. Wall Street sentiment toward the chipmaker remains overwhelmingly positive, with most analysts maintaining buy-equivalent ratings on the stock.
Nvidia has remained one of the biggest beneficiaries of the AI infrastructure boom, supported by strong demand for graphics processors used in data centers and machine-learning systems. Continued revenue growth and upbeat guidance could place further pressure on bearish positions against the company.
Could the Market Repeat the 1987 Crash?
Burry’s comparison with 1987 reflects concerns about market concentration, investor complacency and leverage rather than a prediction that the two periods will unfold in exactly the same way.
The 1987 crash culminated in Black Monday, when the Dow Jones Industrial Average fell more than 22% in a single session. Portfolio-insurance strategies and automated selling contributed to the speed and severity of the decline.
Today’s market structure is different, but systematic trading strategies still respond to changes in volatility and momentum. A sudden increase in volatility could force leveraged funds to reduce exposure, potentially accelerating a broader selloff.
For now, strong earnings and continued inflows are supporting US equities. Burry said he is prepared to limit his losses if the market continues moving against his positions.
Whether his warning proves justified may depend on the durability of AI spending, the flow of new capital into equities and the behavior of volatility as major indexes continue setting records.
