Michael Burry on China
TL;DR
Michael Burry currently views China as possessing a structural advantage in AI development due to its aggressive power grid expansion compared to the U.S.
Key Points
In the first quarter of 2025, he bought bearish put options on Chinese tech companies including Alibaba, Baidu, JD.com, and PDD Holdings.
He argued that China will win the AI race if the industry continues relying on the current path of power-hungry chips due to its superior electricity grid growth slope.
The investor previously held significant stakes in major Chinese technology firms before trimming those holdings in late 2024.
Summary
Michael Burry, known for predicting the 2008 financial crisis, has expressed significant concern regarding China's long-term position in the artificial intelligence race, primarily centered on energy infrastructure. He highlighted data indicating that China's installed electricity generation capacity has surged at a much steeper rate than that of the United States and Europe since the early 2000s. The investor argues that this accelerating power buildout provides China with a structural edge if the AI industry continues to rely on increasingly energy-intensive chips, such as those produced by Nvidia.
He contends that the current U.S. AI strategy, which relies heavily on power-hungry hardware, is on the wrong trajectory because U.S. transmission grid development is decelerating due to permitting issues. Conversely, he notes that China is building transmission capacity "at will" to match its power output, leading to a situation where U.S. companies are investing in an arms race they are structurally positioned to lose. Furthermore, Burry has previously taken bearish positions, using put options against major Chinese technology stocks like Alibaba and JD.com.
Frequently Asked Questions
Michael Burry currently maintains a highly skeptical or bearish position on many Chinese technology stocks, which is evidenced by his firm purchasing put options against several major players. He has been known to shift his portfolio, cutting stakes in companies like Alibaba and JD.com after holding them.
Yes, his stance has shifted from having substantial long positions in Chinese tech stocks to initiating bearish hedges using put options during the first quarter of 2025. This change was notable given his prior investment in the sector.
Michael Burry believes China has a structural advantage in AI because its electrical grid capacity is growing much faster than that of the U.S. He posits that the dominance of power-hungry chips ties AI progress to energy infrastructure, a domain where he sees China outpacing the U.S.