Michael Burry's New Bet Against Micron Stock Expires in June 2027. I Think His Timing Is Off.

Michael Burry was already betting against Micron Technology (NASDAQ:MU). On Sept. 28, the investor famous for calling the housing crash told his newsletter subscribers that he'd traded that short position for put options expiring in June 2027, with strike prices in the $500 range.

With the memory chipmaker's stock at around $1,065 as I write, those puts only pay off at expiration if the shares lose about half their value in under nine months.

Two days after Burry's post, Micron reported the biggest quarter on record. Revenue grew 379% year over year to $54.2 billion. And management said it still can't tell when the shortage driving those numbers will end.

I think Micron's own construction schedule is the best guide to which of the two has the timing wrong.

Image source: Getty Images.

Burry's bet has an expiration date

Burry spelled out his thinking in a Substack post on Sept. 22, saying that he expects the memory shortage to end over the next two years as production catches up, with memory then going through another down cycle. He also flagged growing Chinese memory production.

With memory's long boom-and-bust history, it's a sensible thesis. High prices tend to bring in new supply.

The trade he picked, though, is narrower. Unlike a short position, a put option has a fixed expiration date. And in his Sept. 28 post, Burry wrote that he was moving his timelines up and wanted more leverage, mainly because he thinks the artificial intelligence bubble could pop sooner rather than later. In other words, he's betting the stock breaks long before the shortage is supposed to end.

Micron's outlook just got brighter

Showing how much the shortage is still helping, Micron's revenue for its fiscal fourth quarter (a 14-week period ending Sept. 3, 2026, one week longer than normal) climbed 31% over the previous quarter. Its non-GAAP (adjusted) gross margin hit 87%, versus 46% a year earlier. For the fiscal first quarter, Micron expects revenue of around $61.5 billion -- another 13% sequential gain.

In June, CEO Sanjay Mehrotra said he expected industry supply to improve gradually in 2028.

"[W]e do not have line of sight to when supply and demand will return to balance," Mehrotra said in the company's prepared remarks for its Sept. 30 earnings call. He also said Micron now expects memory supply-demand conditions to be far tighter in calendar 2027 and 2028 than in 2026.

Sure, Burry does have one trend on his side. Micron's DRAM price rises slowed sharply, from the low-60s percentage range sequentially in fiscal Q3 to the high-teens range in fiscal Q4. And management expects a more moderate pace of price gains over the rest of fiscal 2027.

Still, prices are climbing, and a down cycle needs them to drop.

Micron also has a lot of its future revenue spoken for. Its remaining performance obligations (contracted revenue at minimum pricing under multi-year take-or-pay customer agreements) are around $150 billion -- more than its entire fiscal 2026 revenue of $133 billion.

When does new supply arrive?

Burry's catch-up case does have Micron's own spending behind it.

Micron spent $27.4 billion on capital expenditures in fiscal 2026, and it expects around $25 billion in the first half of fiscal 2027 alone, with more in the second half. But new buildings take time. Micron's ID1 fab in Idaho should begin wafer output in mid-calendar 2027, and the company said a new fab's output becomes more meaningful only a few quarters after it starts. Most of the extra construction spending it just added is meant to speed up cleanroom space for late calendar 2028 and beyond.

Burry's puts expire around the time ID1's first wafers come out, while his two-year window ends closer to when that new cleanroom space should arrive. His thesis fits Micron's schedule far better than his puts do.

If Micron is right, annualizing its fiscal Q1 guidance gives adjusted earnings per share of about $153, putting the stock at about 7 times earnings without counting any growth past that quarter.

If Burry is right about 2028, though, those earnings might drop sharply when the new supply arrives. And a low price-to-earnings ratio on peak profits can still turn out to be expensive.

Ultimately, I think Burry might well be right that memory turns down again. But betting the stock halves by next June is betting against Micron's order book in a stretch management expects to be even tighter than 2026. I wouldn't take that side of the trade. I also wouldn't assume the shortage outlasts the cleanroom space Micron itself is paying for.

Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Micron Technology. The Motley Fool has a disclosure policy.