Michael Burry Increases Nebius (NBIS) Short Position Despite 34% Stock Rally on Earnings Beat

Key Takeaways

Table of Contents

Nebius Group shares rallied 34% following Q2 results showing revenue of $582.3 million, a year-over-year increase of 454%
On the same day earnings were released, Michael Burry increased his short stake, describing Nebius as representative of “what the top of a boom looks like”
Burry initially revealed his short position on August 6 when shares traded around $212; with the stock closing near $259, his bet is currently losing money
The central thesis behind Burry’s short focuses on depreciation methodology rather than demand fundamentals, arguing AI firms inflate earnings by extending equipment useful lives
The company finished Q2 with cash reserves of $8 billion and operating cash flow of $2.2 billion, while deploying $5.7 billion toward capital investments

Shares of Nebius Group jumped 34% on August 12 following the release of second-quarter financial results. The company reported revenue of $582.3 million, representing a 454% increase from the same period last year and exceeding Wall Street’s consensus estimate of $572.75 million.

Nebius Group N.V., NBIS

The impressive earnings report didn’t persuade Michael Burry to reconsider his bearish stance. The founder of Scion Asset Management, famous for his successful bet against the subprime mortgage market in 2008, expanded his short position on the very day the results were announced.

Burry’s initial short position disclosure came on August 6 when the stock was trading around $212 per share. With shares closing near $259 on August 12, his current position sits in negative territory.

Breaking Down the Financial Results

Nebius, an AI cloud infrastructure provider powered by Nvidia chips that was spun off from Russian tech giant Yandex and is now headquartered in Amsterdam, recorded AI cloud revenue of $575 million, representing a 514% year-over-year jump.

During the quarter, the company secured four major agreements, each carrying a total contract value exceeding $1 billion on average. The value of new customer contracts expanded more than ninefold compared to the previous quarter.

As of June 30, Nebius held $8 billion in cash reserves and produced $2.2 billion in operating cash flow. The company’s capital spending reached $5.7 billion, surpassing analyst projections of $4.7 billion.

In the shareholder letter, CEO Arkady Volozh stated: “We could sell our entire 2027 capacity on these terms today.”

Additionally, the company increased its 2026 contracted power objective to 5 gigawatts from the previously announced target of 4 gigawatts.

Understanding Burry’s Depreciation-Based Thesis

Burry’s bearish position isn’t rooted in doubts about AI demand. Instead, his argument centers on the depreciation accounting methods employed by AI infrastructure providers.

He argues these companies artificially extend the estimated useful life of computing hardware that typically requires replacement every two to three years, resulting in inflated profitability metrics.

Nebius adjusted its server depreciation schedule from four years to five years beginning in 2026. Burry has highlighted this type of accounting adjustment as a prime example of what artificially boosts earnings throughout the industry.

In Q2, Nebius recorded depreciation and amortization expenses of $259.7 million, representing 45% of total revenue. Under generally accepted accounting principles (GAAP), the company posted a net loss of $190.4 million for the quarter.

On August 12, Burry also expanded short positions in Micron and Oracle. His portfolio of short bets includes Nvidia, Palantir, Applied Materials, and Caterpillar.

CoreWeave’s stock climbed more than 19% on August 12 after the company raised its full-year guidance, contributing to broader gains across AI infrastructure stocks.

At approximately $259 per share, Nebius is valued at roughly 20 times its 2026 revenue guidance range of $3.0 billion to $3.4 billion. Through June 30, the company completed a sale of 12.7 million shares at an average price of $223.60.

The critical question going forward is pricing sustainability. In early Q3, Nebius executed its first short-term capacity agreement at a rate of $40 to $50 million per megawatt.

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