Michael Burry Takes Bearish Position Against Oracle Through Put Options
Michael Burry has revealed a bearish position against Oracle Corp through put options and direct short positions established over six months. The 'Big Short' investor criticized Oracle's aggressive cloud computing expansion strategy, which has resulted in $95.00 billion in outstanding debt. Oracle shares declined 40.00% from September peaks despite an earlier 36.00% single-day jump on bullish cloud forecasts. Burry's position reflects broader AI boom skepticism, though he avoids shorting diversified tech giants like Meta, Alphabet, and Microsoft.
*this image is generated using AI for illustrative purposes only.
Michael Burry, the renowned investor who gained fame for predicting the 2008 financial crisis as depicted in 'The Big Short', has revealed a new bearish position against Oracle Corp. In a Substack post published after Friday's market close, Burry disclosed that he owns put options on Oracle shares, which typically increase in value as the underlying stock price falls.
Burry's Oracle Position and Rationale
Burry indicated he has taken a comprehensive bearish stance on Oracle, combining put options with direct short positions established over the past six months. When asked by a reader about his decision to bet against Nvidia rather than Oracle, Burry expressed strong criticism of Oracle's strategic direction.
"I do not like how it is positioned or the investments it is making. It did not need to do what it is doing, and I do not know why it is doing this. Maybe ego," Burry wrote, though he did not disclose specific details about his put options.
Oracle's Financial Position and Debt Concerns
Burry's skepticism centers on Oracle's aggressive expansion into cloud computing services, which has required substantial capital investment in data center capacity. This strategic shift has resulted in significant debt accumulation for the database software company.
| Financial Metric | Details |
|---|---|
| Outstanding Debt | $95.00 billion |
| Market Position | Largest corporate issuer outside financial sector |
| Debt Index | Bloomberg high-grade index |
The company's debt load of approximately $95.00 billion makes it the biggest corporate issuer outside the financial sector in the Bloomberg high-grade index, highlighting the scale of Oracle's financial commitments to its cloud infrastructure buildout.
Oracle's Volatile Stock Performance
Oracle shares experienced significant volatility throughout the year, reflecting investor uncertainty about the company's cloud strategy and financial position.
| Performance Metric | Details |
|---|---|
| September Single-Day Jump | +36.00% |
| Year-End Decline from Peak | -40.00% |
| Catalyst for Jump | Bullish cloud business forecast |
| Decline Factors | Rising capex, debt concerns, deal structure questions |
The stock surged 36.00% in a single September session following the company's bullish forecast for its cloud business, signaling strong demand tied to artificial intelligence applications. However, these gains quickly eroded as investors focused on rising capital expenditures, questions surrounding cloud deal structures, and concerns about the expanding debt load.
Broader AI Investment Strategy
Burry's Oracle position fits within his broader skepticism toward the artificial intelligence boom. He previously revealed bearish bets against AI chipmaker Nvidia Corp and Palantir Technologies Inc in November. However, Burry explained his selective approach to shorting technology companies, avoiding larger firms with diversified business models beyond AI.
"If I short Meta, I'm also shorting its social media and advertising dominance. If I short Alphabet, I'm shorting Google Search in all its forms, Android, Waymo, etc. If I short Microsoft, I'm shorting a global office productivity SaaS goliath," Burry explained. "The big ones are not pure shorts on AI."
Burry believes these diversified technology giants will eventually rein in spending, absorb losses from overbuilt capacity, and potentially write down assets while maintaining dominance in their core businesses. He described Nvidia as "the most concentrated way to express a bearish view on the artificial intelligence trade," noting that shorting it remains relatively inexpensive due to its popularity among investors.
Market Implications
Burry's disclosure adds to growing investor scrutiny of companies making substantial AI-related investments. His position against Oracle specifically targets a company that has committed significant resources to cloud infrastructure expansion, raising questions about the sustainability and profitability of such investments in the current market environment. Oracle did not immediately respond to requests for comment regarding Burry's position.
20
