Michael Burry is doing the same thing he did in 2007. Buying the trade nobody wants.
This time, the trade is "anything not pulled into the AI vortex."
In a Monday night Substack post, the man who called the housing crash laid out fresh buys. He picked names he says are being ignored. The market is pouring cash into one theme: AI.
Burry said he added to MercadoLibre in the mid-$1,500 range. He called the Latin American e-commerce name a "clean long-term winner." He said it trades at a discount. The reason: its overseas exposure.
He also boosted stakes in software maker Adobe and payments firm PayPal. He added to pet-health name Zoetis. He built a full stake in Lululemon. The apparel brand has been bruised in the last year.
The link is what is not on the list. None of these names is an AI darling. Most have been left behind. Money has rotated into a tight set of AI trades.
Burry called the move "the mass whale fall happening away from the main spectacle." That is his phrase for the quiet selloff in non-AI stocks. AI names go vertical while the rest get ditched.
He drew the parallel direct: "In 1999 this happened too. The old economy and international stuff just got ditched in favor of the All-American bubble."
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Burry did not just lean on his gut. He pointed to data from Apollo chief economist Torsten Slok.
87% of venture capital now flows into AI-linked firms. AI-linked borrowers make up nearly half of new investment-grade bond deals. They also make up about 38% of junk bond deals.
That kind of money pile-up is what the dot-com era looked like. It hit just before that bubble cracked. Burry pointed to more than $100 billion of high-grade debt sold in 1999-2000. Most of it was later cut to junk within a few years.
His framing: "It is just an asset bubble, plain and simple. Debt issuance always starts out clean. That's how it gets sold."
He is not telling traders to short AI. He is telling them to trim anything going vertical. And look at what has been left for dead.
Burry has been early before. He has also been wrong before. His 2023 short bets against the broader market did not pay.
The points he is making this time are about flows, not feelings. A market where 87% of venture cash chases one theme has a pile-up problem.
A bond market ruled by AI junk deals has the same problem. Both can run longer than skeptics think. Both have a way of breaking at the same time.
Burry's playbook here is the contrarian's classic. Sell what is loved. Buy what has been left for dead.
Whether that pays off depends on when the rotation hits, not whether it does.
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