Closely followed investor Michael Burry is urging investors to reduce their holdings in technology stocks immediately because the market has reached speculative levels similar to past bubbles.
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New trading tool for NVDA bearsBurry famously predicted the 2008 financial crisis and implosion of the subprime mortgage market, an event chronicled in the book “The Big Short.” As such, his views and warnings about the stock market carry a lot of weight with investors.
Now, in his latest Substack post, Burry tells investors to “reject greed” as excitement surrounding artificial intelligence and momentum-driven trading push stock valuations to unsustainable levels. “An easier way for most is to simply reduce exposure to stocks, to tech stocks in particular. For any stocks going parabolic reduce positions almost entirely,” writes Burry in his latest post.
The investor hasn’t named specific stocks to sell. But companies he has singled out as risky include Tesla (TSLA), Nvidia (NVDA), and Google parent company Alphabet (GOOGL).
The Market’s AI Frenzy
Burry also notes that he has “a significant leveraged short position” against a portfolio of companies he views as depressed and cheap, a strategy he used back in 2000 when the dot-com bubble burst and the stock market crashed.
However, Burry cautioned other investors from betting against the market through short selling. “Shorting is not the answer. It is not something most people should ever do,” he wrote. “The idea is to raise cash, and prepare to put it to work when it makes more sense to do so,” said Burry. The investor has warned for months that the stock market’s focus on AI resembles the final stages of the dot-com bubble.
Is NVDA Stock a Buy?
Nvidia’s stock has a consensus Strong Buy rating among 42 Wall Street analysts. That rating is based on 40 Buy, one Hold, and one Sell recommendations issued in the past three months. The average NVDA price target of $274.38 implies 24% upside from current levels.
