Michael Burry vindicated as Nebius stock drops over 17% — and he's warning of a coming chip glut Becky Robertson Fri, November 13, 2026 at 5:15 AM EST 6 min read NVDA +2.12% NBIS -2.22% GOOG +1.07% MU -0.67% AMD -2.44% Explore stocks on Coinbase Trading disclosure Trading disclosure The above button links to Coinbase. Yahoo Finance is not a broker-dealer or investment adviser and does not offer securities or cryptocurrencies for sale or facilitate trading. Coinbase pays us for certain activity generated through this link. Prices displayed are informational.
Those who bet against the AI boom — or predicted it would all come crashing down sooner or later — are having a good week on the markets.
First it was Nvidia [NASDAQ:NVDA], the AI darling at the heart of the boom, which lost about a third of its stock value since its peak in early October, as CEO Jensen Huang's career imploded in an inferno of allegations involving extramarital affairs and an apparent Chinese spy.
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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.
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."
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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.
For instance, Business Insider reported that GMO's co-founder Jeremy Grantham said the current valuations for AI stocks are "obviously a bubble" and that "the market will become a whole lot cheaper" once it bursts.
DoubleLine Capital's founder Jeffrey Gundlach echoed this sentiment more recently in an interview on the Julia La Roche Podcast. As the so-called "bond king" warned, "You're going to have fallout and losers in the AI race to the holy grail. It's going to happen. And that's what's going to be what leads to the next very significant drawdown in the risk assets."
Although Gundlach said he doesn't know when the fall will come, he says it's close enough that he wants to be "out" of AI equities. Instead, Gundlach recommended an equal-weighted ETF tracking Fortune 500 companies to avoid overconcentration in AI, along with exposure to assets like high-quality bonds, emerging market debt, gold and a commercial real estate ETF.
On the "chip glut" theme, the analyst Sujai Shivakumar from the Center for Strategic and International Studies echoed Burry's opinion that "Chinese overcapacity" in the chip sector could become a major risk for companies like Micron. As Shivakumar wrote, "Expanding Chinese DRAM and NAND production may ease some near-term pressure, but it could also produce future surplus, dumping, trade friction, and deeper dependence on Chinese suppliers for commoditized but strategically important memory devices."
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Updated with files from Moneywise editor G.M. Buck
This article originally appeared on Moneywise.com under the title: Michael Burry vindicated as Nebius stock drops over 17% — and he's warning of a coming chip glut
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