Michael Burry, the investor famous for betting against the housing market before the 2008 financial crisis, has warned that U.S. stocks could be headed for a crash similar to the one in 1987. In a Tuesday Substack post titled 'Trading Post August 4, 2026 My Options,' Burry said he still holds short positions against Nvidia, Palantir, Tesla, and other AI-linked stocks. His warning comes as the S&P 500 and Nasdaq Composite both closed at record highs on Tuesday.
What Burry is betting against
Burry's short positions extend beyond individual AI stocks. He also shorted the iShares Semiconductor ETF (SOXX), Micron, Caterpillar, and Applied Materials. His bet against Nvidia is currently losing money, he acknowledged. Nvidia is scheduled to report earnings on August 26, and most analysts rate the stock a buy.
The 1987 comparison
Burry did not provide a detailed timeline for his crash prediction, but he compared the current market environment to the conditions before the 1987 Black Monday crash, when the Dow Jones Industrial Average fell 22.6% in a single day. He believes demand for AI infrastructure depends on financing that may prove unsustainable. Equities advanced on Tuesday due to upbeat corporate earnings and lower oil prices, but Burry sees trouble ahead.
Burry's trading strategy
Burry said he would cut losses if trades moved decisively against him. That suggests he is not married to his short positions and will adjust if the market continues to rally. His Substack post did not specify the size of his positions or the exact options he is using.
What comes next
The next major test for Burry's thesis will come when Nvidia reports earnings on August 26. If the company delivers strong results and the stock jumps, Burry's short could take a bigger hit. If the AI trade falters, his warning may gain credibility. Either way, he has already signaled he won't let a losing trade run forever.
