Burry's Oracle Put Bet: A Tactical Response to a 36% September Surge

The specific event is clear: Famed investor Michael Burry disclosed owning put options on Oracle in his Substack newsletter after markets closed on January 9, 2026. This move is a direct tactical response to the stock's explosive run. The catalyst is twofold: a 36% surge in September alone on AI cloud forecasts, and the company's high debt load that Burry has cited as a concern. His post, made in his paid newsletter 'Cassandra Unchained,' is not a surprise given his loud bearish stance on the AI rally, but it marks a new, leveraged phase in his thesis.

This puts bet is part of a multi-stage bearish play. Burry's earlier direct short of Oracle shares, which he executed during the last six months of 2023 and 2024, has already been unwound. Evidence shows he sold all 50,000 shares in Q1 2024. The put options now represent a fresh, options-based bet against a stock that has been one of the year's biggest winners. Oracle stock is up 86.8% year-to-date through September, having surged 36% in that single month. Burry's timing is opportunistic, targeting a peak in sentiment after such a powerful move.

The Trade Setup: Mechanics and Risk/Reward

Burry's new bet is a classic options play: he owns put options on Oracle shares. This is a cheaper, more tactical alternative to the direct short he previously held. The trade's value increases if the stock price falls from its current level near $198.77. The key risk is that the options expire worthless if the stock holds its ground or rallies further, a scenario that would cost him the premium paid for the puts.

His bearish thesis rests on two pillars. First, Oracle's massive $95 billion debt load creates financial vulnerability, especially as the company funds its aggressive AI and cloud expansion. Second, Burry views the company's investments as questionable, driven more by ego than necessity. This makes Oracle a pure AI play, unlike diversified giants.

That's the core of his selective targeting. Burry avoids shorting companies like Meta, Alphabet, or Microsoft because their dominance in non-AI businesses-social media, search, productivity software-acts as a buffer. If those companies face a sector correction, they can still rely on their core engines. Oracle, he argues, is not that diversified. Its recent 36% surge in September was a direct bet on AI cloud demand, leaving it exposed to a sentiment shift. The put options are a leveraged bet that this pure-play vulnerability will be punished.

The Valuation Check: Is the Run Sustainable?

The sheer scale of Oracle's run raises a fundamental question: can this momentum be sustained? The stock is trading at over six times its value compared with five years ago, a multiple that demands flawless execution. The recent 36% surge in September was a direct bet on AI cloud demand, but that bet now faces two major hurdles: valuation and costly execution.

First, the valuation is stretched. The explosive growth in remaining performance obligations (RPO) to $455 billion, largely driven by a single $30 billion annual contract with OpenAI, has fueled the rally. Yet this backlog is a promise, not a guarantee. The market is pricing in a seamless, multi-year delivery of that capacity. Any stumble in converting these contracts into consistent, high-margin revenue would pressure the stock.

Second, the execution path is expensive and uncertain. Oracle is making an audacious bet on the growth of AI computing, which requires massive data center investments. The company is competing in a brutal hyperscaler war against Microsoft, Amazon, and Google. More critically, AI-specific cloud commitments are expected to yield lower 30-40% gross margins compared to its traditional software business. This means the revenue growth Oracle is forecasting will come at a significant cost, pressuring its overall profitability as it scales.

The bottom line is that the stock's valuation now embeds a best-case scenario. Burry's put bet is a tactical play on the risk that this scenario unravels. If Oracle's costly data center build-out hits cost overruns, if its hyperscaler competition squeezes its pricing, or if the OpenAI contract faces any friction, the current valuation could quickly look unsustainable. The event-the massive run-has highlighted these vulnerabilities, creating the mispricing opportunity Burry is targeting.

Catalysts and Risks: What to Watch

The setup is now clear. Burry's put bet is a tactical wager on a specific event: a sharp reversal from Oracle's recent peak. The stock's path from its September high to its current level will be the immediate catalyst. For the bet to pay off, the stock needs to break down decisively from its recent range. For the bull case to hold, it must hold above key technical levels and show continued strength.

The bull case hinges on two factors. First, Oracle must demonstrate that its AI cloud demand is not a flash in the pan. Continued strong quarterly results, particularly in its cloud infrastructure segment, would validate the long-term growth thesis. Second, execution must succeed. The company needs to manage its $95 billion debt load effectively while scaling its costly data center build-out. If the stock can hold above recent support and keep momentum, it would signal that Burry's concerns about financial vulnerability are overblown.

The bear case is more straightforward. A broader pullback in AI stocks could quickly drag down the pure-play Oracle. More specifically, any near-term miss on AI revenue targets or a slowdown in converting its massive remaining performance obligations (RPO) into cash flow would trigger a sharp decline. The stock's 40% drop from its September peak shows how quickly sentiment can shift when execution risks materialize.

The key risk for Burry's bet is that it is speculative and low-conviction. The stock could remain range-bound, consolidating after its volatile run, which would likely cause his options to expire worthless. Alternatively, if AI hype reignites and Oracle delivers another surprise beat, the stock could rally further, punishing the put holder. This is not a bet on a fundamental breakdown but on a sentiment shift following a massive run. The event-the 36% September surge-has created the mispricing, but the market's next move is the real catalyst.