Michael Burry warns of 1987-style crash as AI rally powers Wall Street; investor shorts Nvidia, Tesla, Palantir | Stock Market News

Michael Burry, the investor made famous by The Big Short, is standing by his bearish view, even as Wall Street continues to surge. With the S&P 500 hitting a record high, driven by a relentless AI-fuelled rally, Burry is refusing to join the optimism, saying the market could still face a sharp sell-off, much like the 1987 stock market crash.

“I continue to believe it is possible we are near a major top, and possibly a 1987-type fall, but the S&P 500 making new highs likely will bring new money into the market,” Burry said in a Substack post.

The S&P 500 jumped 1.9% Tuesday to its first record close since June. More than 80% of S&P 500 companies are beating analysts' earnings expectations for the last quarter, according to LSEG data.

The Dow Jones Industrial Average rose 907.47 points, or 1.71%, to 54,085.88, and the S&P 500 gained 136.02 points, or 1.79%, to 7,736.52, each setting all-time closing highs. The Nasdaq Composite rose 671.10 points, or 2.59%, to 26,584.99.

Burry has been one of Wall Street's biggest critics of the AI boom. He believes the rapid growth in spending on AI infrastructure is being supported by financing deals that may not last. According to him, the market’s advance is creating a self-reinforcing cycle, with declining volatility encouraging systematic investors to increase exposure.

“Remember, the market going up on falling volatility forces vol-targeting funds to leverage up, and brings leverage from other momentum strategies into play,” he wrote.

In the face of the rally, Burry said he continues to hold short positions in the iShares Semiconductor ETF (SOXX), Micron, Nvidia, Caterpillar, Palantir, Tesla and Applied Materials.

The investor said he remains confident in his long-term outlook for those positions, though he added that he would cut his losses if the trades moved decisively against him. All of the positions remain profitable except for his bet against Nvidia, he said.

“Again, shorting is not for everyone,” Burry wrote. “I must short. Most should not.”

Sanchari Ghosh is an Assistant Editor at Mint with over 12 years of experience in journalism, specialising in personal finance, DLT & DeFi, geopolitics and foreign policy, with a particular emphasis on how these areas intersect. <br> She writes extensively about how money works in everyday life—helping readers navigate personal finance decisions. <br> As AI reshapes investing behaviour, capital is increasingly flowing into decentralized ecosystems, redefining how assets are managed, traded, and valued. She focuses on explaining how money flows within frameworks like Distributed Ledger Technology (DLT), DeFi protocols, and crypto markets—while also exploring what the future of money could look like in a trustless, programmable financial world. <br> She also focuses on immigration-related issues, simplifying complex topics around visas, passports, overseas financial planning, and the many practical challenges Indians face while moving or living abroad. <br> Alongside personal finance, Sanchari has a strong understanding of international politics, contemporary and historical conflicts, and global state decisions. She closely tracks how geopolitical developments influence economies, markets, and individual financial choices, bringing together finance and global affairs in her reporting. <br> She began her career as a desk editor, which gave her a strong foundation in news writing. Over time, her interest naturally shifted toward personal finance. Before joining Mint in 2020, she worked DNA, The Times of India, Outlook Money, BloombergQuint, and ETMoney. At Mint, she got an opportunity to expand her coverage to include immigration and geopolitical developments while continuing to closely follow personal finance trends and market movements.As a journalist, she is committed to accuracy, intellectual rigour, and fairness. <br> She is an English Major and her work took her across cities including Delhi, Mumbai, and Pune. Living independently from an early age gave her firsthand experience in managing life and money on her own. This practical exposure sparked her strong interest in personal finance. <br> Outside the newsroom, Sanchari is a sports enthusiast who regularly plays lawn tennis and squash. In her younger years, she was also a national-level badminton player.

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