'Big Short' investor Michael Burry is vindicated as AI stocks like Nebius tumble — and he's warning of a coming chip glut

Now, Dutch cloud computing giant Nebius [NASDAQ:NBIS] took a tumble on the Nasdaq on Thursday as news broke that it’s lowering its revenue outlook for the year. It’s down about 17.5% on the day as of the early afternoon, trading at just under $128 per share compared to about $155 at Wednesday’s close, and well down from its peak of nearly $287 in June.

The company, which operates servers and data centers and provides cloud infrastructure for other AI companies, is still waiting on some computing capacity to come online. It was originally expected for the end of this year, but is now scheduled for some time in the first half of 2027.

As a result, it says its revenue for the year will come in at the low end of its expected $3 billion to $3.4 billion.

Like most so-called neoclouds, Nebius has massive “capex,” or capital expenditure, laying out billions now to build out computing infrastructure it hopes will be profitable later.

The company says its customers’ prepayments and its financing against existing contracts will cover 75% to 85% of its capital expenditures next year.

Nebius reported losses of $0.13 a share. Revenue is up nearly sevenfold from last year, to $980.8 million for the quarter, beating expectations.

Burry continues to be bearish on AI

In a September Substack post, “Big Short” investor Michael Burry characterized the Nasdaq, then at a record high, as “historically overvalued, and historically top heavy,” which gave him increasing confidence to ramp up his short positions against a few major AI stocks.

Among those shorts was Nebius. Although Burry no longer discloses his position sizes publicly, having shuttered his asset management company, he wrote in August that “Nebius is what the top of a boom looks like.” Nebius shares now trade well below the $212 and $247 levels at which he disclosed and added to his short. He stands to profit handsomely.

A major part of Burry’s bearish thesis is that there will soon be “a chip glut again” as the semiconductor industry falls back into its traditional boom-to-bust cyclicality.

As Burry wrote, “Over the next two years this shortage will blow off as production catches up, and memory will have a down cycle again.”

To support his case, Burry shared an interview with the Taiwanese electronics maker Acer’s CEO Jason Chen. When asked whether he noticed memory shortages, Chen responded, “No way,” adding, “How could there be a continuous shortage? China’s production capacity has been consistently increasing, and there is absolutely no shortage issue.”

Burry isn’t the only AI skeptic​

Recent signs of weakness in the tech sector, including a disastrous quarter for Alphabet [NASDAQ:GOOGL], have lent some credence to Burry’s perpetually bearish outlook. The Nasdaq plunged 5.5% and entered correction territory in the first week of November. Chip giants Micron Technology [NASDAQ:MU] and AMD [NASDAQ:AMD] suffered double-digit routs.

And there are other prominent investors who see signs of this party coming to an end.