The Reemergence of Volatility in the Tech Sector:

Red Flags and Investor Strategies

In my latest post, I break down the red flags emerging across the tech sector—from Michael Burry’s bearish positioning to OpenAI hinting at government backstops—and what these signals mean for investors navigating a market built on sky-high expectations.
If volatility is returning, you’ll want to be prepared.

Key Findings:

· Recent events are raising red flags for many tech investors and increasing volatility for many tech stocks.

· First, Michael Burry, famous for his decision to short the market in 2008, is bearish partially because of concern over accuracy of accounting statistics. He has closed his fund to outside investors—an approach he took in 2008, illustrated in The Big Short—and he has purchased puts for several firms he believes are overvalued, including NVDA and PLTR.

· OpenAI’s CFO suggested the governments might serve as a financial “backstop,” implying public guarantees could support the company’s massive infrastructure spending if private financing fell short. This alarmed investors because it signaled potential solvency issues.

· Given high valuations in AI-linked stocks and extreme concentration in the “Magnificent 7,” investors may benefit from diversifying away from mega-cap AI names toward smaller, non-AI tech firms with more balanced risk profiles.

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