Investor Michael Burry, known for his pivotal role in “The Big Short,” has recently disclosed a bearish stance on Oracle Corporation. Burry has acquired put options against Oracle shares and has also shorted the stock over the past six months, indicating a significant lack of confidence in the company”s future.
The announcement comes as Oracle”s stock has plummeted by 40% from its peak in September 2024. This decline followed a brief surge spurred by optimistic forecasts related to artificial intelligence (AI) and cloud computing. However, as the hype faded, concerns regarding the company”s heavy debt load, which amounts to approximately $95 billion due to extensive data center expansions, have become a focal point for investors.
Burry expressed skepticism about Oracle”s strategy in cloud computing, describing the investments as unnecessary and hinting that ego may be influencing corporate decisions. He stated, “I do not like how it is positioned or the investments it is making.” This sentiment aligns with his previous bearish bets on other tech stocks such as Nvidia and Palantir.
Oracle”s aggressive push into AI-related cloud services has required substantial capital expenditure, raising alarms about the sustainability of its debt levels. As the company”s stock faced increased scrutiny, it became the largest corporate bond issuer outside of financial institutions.
Burry has opted to focus his short strategy on Oracle rather than more diversified tech giants like Meta, Alphabet, and Microsoft, which he believes have robust business models beyond AI. He noted that shorting these companies would mean betting against their strong core operations, which are not solely reliant on AI revenue.
In contrast, Burry views Oracle”s cloud strategy as a major gamble without significant safety nets. He also indicated that Nvidia remains a compelling target for shorting due to its high valuation and dominance in the AI sector. Burry”s bearish outlook reflects a growing skepticism regarding the financial viability of heavy investments in AI technologies.
Oracle did not respond to requests for comment regarding Burry”s short position and the company”s strategic direction during after-hours trading.
