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Michael Bury predicted the 2008 crash . He made a fortune betting against the mortgage bubble, and now he's pointing to a new bubble— artificial intelligence. So, Bury is playing hard against the AI, and right now he's taking huge losses. The AI stocks he bet against continue to rise . One of them, Nebius, showed a 454% increase in sales.
So his infamous bet looks like a failure, doesn't it? Well , guess what? He bought a bunch of famous stocks. So while everyone watches Bury's short positions lose out, he's invested in five stocks that no one is talking about. So, the " big shorter" is also actively buying up shares. If this is your first time here, my name is Ken Freeman, I am a professor, CFA charterholder, and trainer for top Wall Street banks such as JP Morgan, Morgan Stanley, and BlackRock.
Today we will look at his short and long positions, from smallest to largest. And at the end there will be an unexpected twist that will tie it all together. This is not a typical 13F video because Michael Bury closed his fund at the end of 2025. This is information from his own newsletter, which he publishes today on Substack.
So what is he wearing shorts for? What is he buying? And why now? First, about the rates that everyone knows about. Michael Bury is shorting three companies that rely heavily on AI. Let's take a look at them. First, Oracle. It builds large computer databases and cloud systems. In fact, this is an invisible foundation for companies.
This cloud computing giant has nearly $5 trillion worth of contracts already signed and waiting to be executed. But to fulfill these contracts, he needs to borrow a bunch of money and build data centers first. And this is Bury's sharpest attack. These companies buy AI chips that wear out in 2-3 years.
On paper, they pretend that the chips last much longer, stretching their lifespan to make the annual costs look much lower. Lower costs make future profits greater. Bury did not hold back. He called it a scam. According to his calculations, Oracle could overstate profits by about 27% by 2028. Next up is Micron.
It produces memory chips needed to run AI servers. Stocks took into account the endless boom, and they skyrocketed. But Bury had seen this film before. Demand for chips heats up, and then there's always a crash. Finally, Nebius. Nebius rents out AI computing power on an hourly basis to companies launching AI models.
Bury opened a short position and called the deal too easy . So how does this "fish " feel there? Healthy and swims fast. Nebia sales increased by 454%. Micron is almost at historic highs. And Oracle seems to have hit rock bottom and is recovering. Each of these short positions is currently unprofitable.
Most people don't understand that shorts are not a free ride. When a stock moves against you, you must deposit more money, known as margin, or buy the underlying stock to close the position. So the average person thinks that the "great shortstop" has lost his talent. But take a closer look at where his money actually went .
If you want to learn how to do these steps, scan the QR code on the screen. So what did he buy instead? Number five—PayPal. The button you click to pay online. Well, PayPal created the " PayPal mafia." Names like Reed Hoffman, Peter Thiel, and Elon Musk. Many billionaires. This is not at all the company it was at the turn of the century .
For years it was a favorite of Wall Street. Then his popularity faded. Growth has slowed. Apple intervened with Apple Pay , and the stock was written off, falling about 25% for the year. Then Bury bought his full position. But why? Because it still prints money every quarter. Tons of free cash flow—the money left over after paying all the bills.
He called it " the fall of the whale." When a whale dies and sinks to the bottom of the ocean, it feeds everything around it. And then something incredible happened. In July 2026, buyers offered $53 billion for a full buyout of PayPal, at $60.50 per share. Shares jumped, and PayPal said the buyout price was too low.
They are currently negotiating a price increase. Bury got in early, and the market proved him right. We've mentioned PayPal many times on this channel. You could say we were right, but we were in a hurry, and in the end the stocks continued to fall. It was like trying to catch a falling knife. Some saw this as a value trap, but in the end, if you bought too much too soon, you probably didn't make a huge profit on the buyout.
Despite all this, I personally did not buy PayPal. I'm more of a Mastercard fan, which I mentioned in previous videos where we discussed this. Number four—Adobe, the software behind almost every image and video you see, including this one. So why did stocks fall so much? One word—fear. The fear is that AI will make Adobe useless.
Enter a sentence in CMM ( LLM) and get a finished image for free. So, traders have dropped its price by about 28% in a year. Berry ultimately took the opposite position in this deal. It entered the market at a price just above $250. His bet is that the fear is exaggerated. Millions of professionals pay Adobe every month and never leave.
This monthly cash flow is incredibly stable. And Adobe has built its own artificial intelligence directly into the tools. It's called Firefly, an AI- powered universal creative studio. Berry saw the panic as the perfect moment to buy. So, as you may already know, we've mentioned Adobe on the channel before.
I actually own Adobe stock. This is my seventh largest position, 3.9%. Interestingly, Adobe hit a 52-week low in late June and has risen over 43% since then. I'm a huge fan and very positive about Adobe . I believe she still has potential for growth. Ultimately, Adobe's concerns about AI are overblown.
Over 97% of their income is regular. They have a lot of corporate clients, and again , that's a pretty stable base. We looked at another similar company, say ServiceNow, they benefit from AI because they use it in their business models. So AI is not so much a threat as a driving force for them. Number three, Zoetis.
If you've never heard of it, that's the point. Zoetis produces medicines for pets and farm animals. Absolutely nothing to do with artificial intelligence. So it was ignored and it became cheap. Berry bought it and used two words. Profitable serving. This is a " pitch" in the baseball sense. A good serve is essentially an easy ball straight down the center.
A serve that is impossible to miss and that you will hit far out of bounds. So why does he say it's a profitable pitch? After all, people pay for their pets in good times and bad, during recessions and market booms. So this is a type of business with stable demand. A depreciated stock with stable demand.
This is exactly what Michael Berry is looking for. I don't know if you've followed Zoetis before, there's another very similar company, Elanco. It was a division spun off from a large pharmaceutical company. And the interesting thing is that if you go back to the COVID times and look at the graph, it just skyrocketed.
I watched at the time and thought, you know what, I missed my chance. If you look, the all-time high was at the end of 2021, but the stock has fallen significantly since then. So, I think this is a potential opportunity. I haven't delved into this, but from a business model and logic perspective, it makes a lot of sense.
This is a defensive asset, and if you need something that doesn't rely on AI, then this is a great option to explore. Second place, Lululemon. The $100 yoga pants your gym is filled with. This is probably the most hated name on this list. The stock has fallen 43% this year. They are currently trading at an 8- year low.
Sales in America slowed, and new brands took over. You've probably heard a lot about Alo and Vuori. While everyone was running away, Behr decided to enter. The price has fallen so much that the company is trading at only 1.3 times annual sales. That's very cheap for a brand that people still love. He sees a brand that is in trouble, but not dead.
As you may know, I've covered Lululemon in the past. This is an asset that I have in my portfolio. This is my fourth largest position, 3.1%. So I'm very positive about Lululemon. My purchase price is around 160s, I think 167. And another positive point: Elliot Management invested a billion dollars in mid- December 2025.
So, their average price is a little over 200 per share. When you see a big activist investor join a company, it should make you think, "Hmm, what do they know that I don't?" I firmly believe that Lululemon can reach just above 300 within the next 12-18 months. What really hit Lululemon hard were the tariffs.
After all, their supplies came from Canada and China. So they got a double whammy. They have been focused on inventory management and logistics re-routing for the last 12 months , but overall I feel very positive about the company. And number one—Mercado Libre, or maybe it's better to say Mercado Libre, is like Amazon meets PayPal in one app for Latin America.
This is his most expensive purchase and the one he is most confident in. He was buying at about 550 per share. He called it a first-class compounder, traded at a discount. Compounding is a business that has been growing for years. And, as many of you know, that's exactly what Melly did. So why is he so confident?
It dominates online shopping across the region. And its payment app is used by hundreds of millions of users every day. And this is a company that is still growing rapidly while everyone else is distracted by AI. This is the anchor of his entire portfolio. We've already talked about Mercado Libre on the channel.
I am a big fan of this company. When I released the video, the estimate was in the 3000+ range, but honestly, I was too conservative in my assumptions. When I used more conventional, conservative calculations, it came out to about $4,600 per share. I think this is a real diamond worth looking into , especially if you want a more international presence and a company with high growth potential for the long term.
So, these are his five long positions. But why these five? The answer completely changes the meaning of this video. If you found this video helpful, please do me a favor— like and subscribe to watch this Wall Street debacle every week for free. So, let's take a step back and look at the big picture.
On the one hand, he is playing down Oracle, Micron and Nebus. On the other hand, he opens long positions and buys five undervalued companies. Everyone thinks that Bury is betting on a market crash, but this is a completely wrong idea. He's just a value investor, period. His short and long positions are one big bet.
Money is flowing out of truly profitable, cheaply traded companies and into anything with the " AI" sticker on it. He short the hype and buys cash flows. One deal, two sides. He even gave it a name: the “ asset bubble.” Simple and clear. A bubble is when prices significantly exceed the real value of the underlying assets.
And as we know, every bubble bursts sooner or later. We've seen this movie before. The Internet was "AI" in its day in the late 90s. Anything with .com in the name was skyrocketing. NASDAQ rose 86% in one year. And here's how it relates to today. Back then, companies borrowed billions of dollars to lay internet cable across the country .
Same story as today. Build now using cheap debt. But most of that cable remained dark and unused for years. And the companies that built it went bankrupt. I don't want to give anyone PTSD, but remember the names Adelphia and Global Crossing. Yes. Then the bubble hit its needle, and the NASDAQ fell 77% .
So what is the connection with the present? While these hype names were burning, the boring money-making " printing presses" that everyone ignored became successful again. During the tech bubble, Warren Buffett bought Coca-Cola, Geico, and Gillette. Sparkling water, insurance and razors. All the boring companies with high cash flow that tech investors laughed at.
Ultimately, the question that needs answering is: is Bury making the right moves? Bury is betting on the decline of the AI sector and buying depreciated “ money machines.” Short the overvalued, long the undervalued. Same rate in both directions. So what does this all mean for you? You don't need a Michael Bury ballot to use this.
Whenever a stock drops sharply, ask about one thing. Is it cheap because it's broken, or cheap because it's boring? "Broken" means that the business is actually dying. " Boring" simply means that the crowd is distracted. Every asset on Bury's list is boring, not broken. That's one question—and that's the whole game.
And now for the honest part , because I'm not going to just "warm you up" . His shorts can be unprofitable for a long time , and cheap stocks can remain that way for years. This requires patience, and this is the most difficult skill in investing. If you want to learn how to value any business yourself, just scan the QR code on the screen.
I just reviewed Soundhound AI, which didn't follow the path of other AI superstars. So, is she boring or broken? Watch the video and decide for yourself . Do you think Bury will be proven right or wrong? Which of his steps do you agree with and which do you disagree with? Let us know in the comments below. As always, be persistent.
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