Big Short Burry bets against Oracle: dislikes its positioning and financing

Movie “The Big Short” inspiration and well-known investor Michael Burry disclosed in a Substack post after Friday’s market close that he holds put options on Oracle and has directly shorted the company over the past six months. Burry has previously publicized short bets against Nvidia and Palantir, and this wager against Oracle further reinforces his view that current AI market valuations are excessively high and severely bubble-like. Burry openly criticized Oracle’s current strategic positioning and aggressive investment behavior. He believes that, in chasing the AI trend, the legacy database software company is making unnecessary heavy-asset expansions, attempting to compete with cloud giants like Amazon and Microsoft through expensive data center construction. Responding to a reader’s question, Burry pointedly stated: **“I don’t like its positioning, nor the investments it’s undertaking. It doesn’t need to do what it’s doing now; I don’t know why it’s doing it. Maybe it’s out of ego.”** ## “Pure AI Bubble Proxy” The core of Burry’s short logic is that he believes Oracle lacks the safety nets of other tech giants and is a fragile "pure AI bubble proxy." Explaining why he chose to short Oracle instead of other tech giants, Burry detailed his selection criteria. He pointed out that Microsoft, Alphabet (Google’s parent), and Meta have strong core business moats; even if AI investments fail, they can survive and maintain dominance. > **“If I short Meta, I’m also shorting its dominance in social media and advertising.** > **If I short Alphabet, I’m shorting all forms of Google Search, Android, and Waymo.** > **If I short Microsoft, I’m shorting the world’s SaaS productivity giant,”** > > Burry wrote, **“These large companies are not pure AI short targets.”** In contrast, Oracle’s current stock price is highly reliant on the single narrative of “surging AI cloud service demand.” Burry believes Microsoft and Google have the ability over time to control expenses, absorb losses from excess capacity, and even write down assets, all while maintaining profitability in their core businesses: “These three companies won’t disappear,” he added. But Oracle, burdened by massive debt and undergoing high-risk transformation, has a much lower margin for error if AI demand disappoints. This move directly impacted market sentiment. Oracle’s stock price has experienced wild swings over the past year; though it soared 36% in one day last September on anticipated AI cloud demand, concerns about swelling capital expenditures and debt have since pushed the price down about 40% from its peak. Burry’s entry has undeniably heightened worries over the sustainability of Oracle’s “high-leverage bet on the future” model.  ## Debt Risks Amid Aggressive Transformation Oracle’s aggressive capital expenditures and worsening balance sheet are another key reason for Burry’s bearish outlook. To transform from a traditional database software vendor into a cloud infrastructure provider able to compete with AWS and Azure, Oracle has spent tens of billions of dollars in recent years buying Nvidia chips and building data centers. This shift from “light asset” to “heavy asset” model has saddled the company with heavy debt. According to Bloomberg, Oracle currently has about $95 billion in outstanding debt, making it one of the largest corporate bond issuers outside the financial sector in Bloomberg’s high-grade index. The market previously celebrated Oracle’s optimistic cloud business forecasts, but as capital expenditures continue to climb—and as doubts about some cloud deal structures and swelling debt grow—investor enthusiasm is rapidly cooling. Burry has clearly identified this vulnerability in Oracle’s financial structure. He believes Oracle is making an “unnecessary” gamble, and this debt-driven expansion is particularly risky in a high-interest rate or industry downturn environment. ## Continuing His Broad Offensive Against the AI Bubble—Would Even Short OpenAI Shorting Oracle is a microcosm of Burry’s skepticism toward the entire AI industry bubble. Burry reiterated in his post his broad doubts about the speed and economic viability of AI infrastructure buildout. **He even said he would choose to short OpenAI if its valuation reached $500 billion.** In his view, the current AI frenzy is awash with pricing errors and unsustainable prosperity. Regarding his previous short target Nvidia, Burry characterized it as the “most concentrated” way to express a bearish AI trade: “Nvidia is also the most beloved and least questioned company,” he wrote, “so shorting it is cheap, and its puts are cheaper than those of larger, more doubted targets.” Burry has even specifically mentioned “Tesla,” calling its valuation absurd and its compensation plan damaging to shareholders. As of this publication, Oracle has not responded to Burry’s comments and short-selling actions. Risk Warning and Disclaimer The market involves risks, and investing requires caution. 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