Michael Burry and Jim Cramer aren't the first two investors you'd expect to agree on a stock, but their disagreement over Micron Technology (MU -0.82%) is particularly interesting.
Burry, the investor made famous by The Big Short, recently closed his outright short position in Micron and replaced it with put options. Cramer, meanwhile, warns that investors betting against the memory chip maker are "digging their own grave."
After Micron's latest earnings report, I think Burry's bet faces a particularly difficult obstacle: the company he's betting against doesn't look much like the highly cyclical memory business investors became exhausted by over the last several decades.
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Michael Burry is betting Micron stock gets cut in half
Burry isn't simply bearish on Micron stock. His trade actually has a deadline before it potentially pays off. On Sept. 28, Burry notified subscribers to his investment newsletter that he had replaced his Micron short position with put options expiring in June 2027 with strike prices around $500. At the time, Micron was trading above $1,000. Put options give an investor the right to sell their shares at a predetermined price. Burry's position will become increasingly valuable if Micron stock plunges toward or below $500.
Burry says artificial intelligence (AI) is a bubble and it could burst sooner than most investors expect. He is so confident in this idea that he moved his timeline for an AI-driven crash forward and wanted additional leverage for such a trade.
This isn't a vague prediction that Micron will someday experience a downturn. Burry is effectively betting that something goes seriously wrong with the AI market before next summer. That's a really bold call considering what Micron just reported.
NASDAQ: MU
Key Data Points
Cramer warns that short sellers are missing an AI-driven transformation
Two days after Burry disclosed his new Micron position, the company delivered a monster fiscal fourth quarter. Revenue for the quarter reached a record $54.2 billion, up 379% year over year. Adjusted earnings per share (EPS) surged to $33.42 per share, while adjusted gross margin reached an astonishing 87%.
Management expects things to get even better. For the first quarter of fiscal 2027, Micron guided for $61.5 billion in revenue and adjusted earnings of $38.15 per share. Management made it clear that they expect memory supply demand conditions to become even tighter during 2027 and 2028.
This growth is the backdrop behind Cramer's argument. Following Micron's earnings, Cramer argued that investors still treating Micron like a commoditized, cyclical memory manufacturer are missing the company's secular AI-driven transformation.
I would not bet against Micron
Micron's bull case extends well beyond AI data centers. High-bandwidth memory (HBM) and advanced DRAM is increasingly needed across different pockets of AI infrastructure -- from autonomous vehicles, aerospace and defense, medical technology, industrial applications, and even humanoid robotics.
Moreover, the company has signed 26 strategic customer agreements and more than 75% of its expected 2027 output is already committed. Remaining performance obligations (RPO) have climbed to roughly $150 billion.
Lastly, Micron finished fiscal 2026 with $68.3 billion in net cash and generated $62.3 billion of adjusted free cash flow for the year. However, the company only repurchased $650 million of stock. Management is planning to return 100% of excess cash to shareholders over time, primarily through share repurchases. That authorization could create a powerful new source of demand for Micron shares.
Of course, today's premium prices for memory and 80%-plus profit margins won't last forever. AI infrastructure spending could slow, while new manufacturing capacity should eventually balance supply and demand. After Micron's spectacular rally, expectations are undeniably high. Although Burry could ultimately be right that another memory cycle is coming, I see a problem with his clock.
His June 2027 puts do not give the bear thesis several years to materialize. Meanwhile, Micron is telling investors that supply is going to remain tight through fiscal 2027 and 2028 while simultaneously forecasting higher revenue, signing multi-year supply agreements, expanding into new AI markets, and preparing to deploy enormous cash toward buybacks. That's a lot to bet against over the next eight months. I think Micron's record revenue, enormous contracted demand, new AI use cases, and upcoming share repurchases suggest the stock is a screaming buy right now.
