Michael Burry's Short Against Oracle Highlights Debt and AI Strategy Risks

The renowned investor who famously predicted the 2008 financial crisis has taken a forceful stance on Oracle. In a recent Substack post, Michael Burry disclosed that he’s positioned himself against the database and cloud computing giant through both put options and direct short selling. Over the past six months, Burry has been actively shorting Oracle shares, continuing a bearish streak that previously included positions against Nvidia and Palantir. His skepticism toward Oracle appears particularly acute, stemming from concerns about the company’s strategic direction and capital allocation decisions.

Burry’s Bearish Bet: Put Options and Short Position in Oracle Shares

Burry confirmed his multi-pronged approach to betting against Oracle without revealing the specific size of his put options or short positions. In his analysis, the investor articulated a fundamental critique of Oracle’s current trajectory. “I do not like how it is positioned or the investments it is making,” Burry stated. “It did not need to do what it is doing, and I do not know why it is doing this. Maybe ego.” His commentary targets Oracle’s aggressive push into cloud computing infrastructure, which demands massive capital expenditures and substantial debt financing to support data center expansion worldwide.

Oracle’s Volatile 2024: Cloud Expansion Debt Weighs on Stock Performance

The past year has been tumultuous for Oracle shareholders. The stock experienced dramatic swings, including a remarkable 36% jump in a single September trading session following bullish cloud forecasts tied to artificial intelligence demand. However, that euphoria proved fleeting. Concerns emerged regarding the rising capital expenditure requirements, questions surfaced about cloud deal structures, and investor focus sharpened on the company’s mounting debt burden. By year’s end, Oracle had surrendered approximately 40% of its value from the September peak.

The financial picture underscores the magnitude of Oracle’s debt expansion. The company now carries roughly $95 billion in outstanding debt, positioning itself as the largest corporate bond issuer outside the financial services sector within the Bloomberg high-grade index. This debt load represents a significant structural commitment to cloud infrastructure expansion, locking Oracle into years of heavy capital spending regardless of market conditions or strategic shifts.

Why Oracle Over Tech Giants: Risk Concentration in a Single Growth Bet

Burry’s decision to short Oracle rather than larger technology firms reflects a nuanced understanding of portfolio risk and business model resilience. He has deliberately avoided establishing short positions against Meta, Alphabet, or Microsoft despite their substantial artificial intelligence investments. The rationale reveals an important asymmetry in how different technology companies absorb strategic pivots.

“If I short Meta, I’m also shorting its social media and advertising dominance,” Burry explained in his analysis. The same vulnerability applies to shorting Alphabet’s search business or Microsoft’s productivity software operations. These companies possess diversified revenue streams that extend well beyond artificial intelligence initiatives. Their legacy businesses generate powerful cash flows that can sustain losses or opportunity costs from artificial intelligence overinvestment without fundamental corporate damage.

“These three will not go away,” Burry added, highlighting the structural advantage of business model diversification. Oracle, by contrast, lacks that protective cushion. The company’s cloud computing expansion represents a concentrated strategic bet requiring extraordinary capital allocation. This concentration creates vulnerability—if the cloud opportunity underwhelms or capital requirements escalate beyond expectations, Oracle lacks alternative cash-generating engines to offset disappointments.

The Vulnerability of Concentrated AI Exposure

Burry’s broader technology skepticism emerged in his comparative analysis. He characterized Nvidia as “the most concentrated way” to bet against artificial intelligence hype, describing the chip manufacturer as “the most loved, and least doubted.” That concentrated exposure paradoxically makes Nvidia an expensive short because fewer investors harbor doubts about its trajectory, meaning downside moves would surprise the market dramatically. Burry even indicated he would short OpenAI at a $500 billion valuation, underscoring his fundamental skepticism about artificial intelligence economics and the pace of infrastructure buildout globally.

Oracle occupies a distinctive position in this landscape—vulnerable like Nvidia due to concentration risk, yet lacking Nvidia’s market dominance and the safety nets that insulate Meta, Google, and Microsoft from strategic mistakes.

Oracle declined to provide comment beyond standard business hours in response to requests for reaction.