Michael Burry Warns of 1987-Type Crash as S&P 500 Hits First Record Since June

Q: If Burry is right about a fragile tech bubble, what specific metric will finally force him to abandon his unprofitable Nvidia short?

There is no single publicly stated metric. Burry’s own trigger is whether the Nvidia trade moves “decisively against” him, meaning a loss threshold he has not disclosed. The clearest hard marker in the available reporting is the structure of his position: put options on about 1 million Nvidia shares with a $110 strike expiring in 2027. Those puts were already described as deeply underwater while Nvidia traded near record highs above $200. That suggests the practical pressure point is not one headline valuation ratio, but whether Nvidia keeps proving the bearish thesis wrong through sustained price strength and fundamentals that extend beyond his time horizon. In practice, the metric most likely to force an exit is Nvidia’s share price staying high enough, long enough, to make recovery in those 2027 puts implausible. Markets will watch that alongside the operating data that matter most for the bull case: data-center revenue, hyperscaler capex commitments, gross margins, and forward guidance. If those keep accelerating and Nvidia continues to hold or expand its roughly mid-20s forward P/E while revenue growth remains exceptionally strong, the short becomes harder to justify. So the answer is simple: not a published valuation trigger, but a decisive adverse move in Nvidia’s stock and fundamentals — especially persistent price strength that leaves his 2027 $110 puts with too little chance of paying off.

3 articles · Updated · CNBC · Aug 4

Burry said Tuesday he is keeping his bearish bets despite the S&P 500’s 1.9% jump to its first record close since June, warning the rally could still end in a 1987-style plunge.
He argued the advance is becoming self-reinforcing: falling volatility is pushing vol-targeting and momentum funds to add leverage, while new highs draw fresh money into the market.
Burry also said the AI boom rests on financing arrangements that may prove unsustainable, reinforcing his skepticism toward semiconductor and high-growth stocks.
His short positions include SOXX, Micron, Nvidia, Caterpillar, Palantir, Tesla and Applied Materials; he said all remain profitable except Nvidia, though he would cut losses if trades turn decisively against him.
The warning came as stronger-than-expected earnings and lower oil prices—on hopes the Strait of Hormuz could reopen—helped lift the Nasdaq 2.7% and nearly 5% over the week’s first two sessions.