At the end of AI is electricity, and behind electricity is copper! “Big bears” bet on the resource gap behind the AI computing power frenzy
The Zhitong Finance App learned that Michael Burry (Michael Burry), who has the title of “big short”, continues to stay away from AI computing power-themed trading where bullish positions are overcrowded and leveraged capital is concentrated, to find value in other fields, and lay out world-renowned copper miners Ero, QXO led by Brad Jacobs, and three major discounted valuations focusing on household consumption, food retail, and animal health care type stock assets.
Michael Berry has long questioned AI computing power expansion and AI infrastructure investment frenzy. Therefore, the “big short” logic in Bury's latest positions and investment layout is that Bury prices “the valuation and profit quality of AI companies” and “physical procurement requirements generated by AI construction” separately, that is, Bury separately assesses the investment value dominated by the computing power chain of AI infrastructure-related chains and the resource requirements brought about by AI construction — he is firmly questioning the investment returns of some AI stocks, and is optimistic about the long-term expansion needs of data centers, power grids, and distribution systems Copper resources .
Bury's recent questions about AI computing power investment trends in global stock markets mainly focus on the relationship between extreme valuations of popular AI computing power-related stocks, return on capital expenses, equipment depreciation, and future payment promises. In the position adjustments disclosed on September 9, he reduced the portfolio risk, sold Nvidia and Palantir put options due in December 2026 and not extended, while still retaining the short stock layout for the two companies, and Palantir and QQQETF put options due in 2027 (QQQ is an ETF tracking the NASDAQ 100 Index ETF with the title of “AI and Technology Stock Trend Vane”); the top three stock shortfalls at the time were Oracle, Palantir, and Bineus, the “AI New Cloud” leader.
On September 19, he further expanded his focus to Amazon, Meta, Alphabet, Microsoft, and Oracle, estimating that the five companies' uninitiated off-balance sheet commitments, such as leases, purchases, and guarantees, exceeded an astonishing $3 trillion, worried that there was a “disastrous serious mismatch” between long-term fixed expenses, rapidly iterating AI hardware, and unfulfilled commercial returns, and warned that “when the music stops, these off-sheet promises will quickly become real liabilities.” These latest market trends and public information are all highlighted. He still maintains a bearish judgment on the leaders in the AI computing power industry chain, while actively adjusting shorting tools and position periods.
Stay away from the cheers of AI parties and look for value that has been snubbed — Burry ignores AI's “cheers” and finds opportunities in copper, QXO, and three other stocks
Although far from popular AI computing power stocks where positions are overcrowded and leveraged capital is concentrated, Burry is indirectly betting on AI through ERO, saying that data center construction will increase copper demand, and that it will take 18 years for new mines to be put into operation.
“The party in the house was full of people, driving AI-related stocks to continue to rise today, but I mostly ignored those 'cheers',” the “big short” investor said in a Substack subscription post.
Bury named five companies: Ero Copper (ERO.US), QXO (QXO.US), Temple & Webster, Sprouts Farmers Market (SFM.US), and ZTS.US. At the same time, he also stated that he holds QXO common shares and its mandatory convertible preferred shares.
Bury is indirectly betting on AI through Ero, a copper and gold producer focused on Brazilian business. “Everyone in the house is going to need lots of copper,” he said.
COMEX copper futures settled at $6.6865 per pound on Monday, about 2% lower than the record set on September 9. Driven by factors such as disrupted mine production, low Chinese inventories, and inventory replenishment before China's National Day, the international copper price benchmark, LME copper futures prices have risen 19% this year, and 46% over the past 12 months. The increase during the year surpassed the SPDR S&P 500 ETF Trust (SPY.US), Invesco QQQ Trust (QQQ.US), and SPDR Dow Jones Industrial Average ETF Trust (DIA.US), with returns of about 13%, 18%, and 9%, respectively.
Burry acknowledged that the current rise partly reflects a temporary weakness in supply. His long-term investment logic is based on a serious mismatch between copper demand and the time required to develop new mines. Citing Apollo's chief economist Torsten Slocke, Bury pointed out that the number of large-scale copper discoveries containing at least 500,000 tons of copper resources has declined from double digits per year in the 1990s and the first ten years of the 21st century to one or two per year in recent years, and there were no such discoveries in 2025.
It takes 18 years for the new deposit to be put into operation, and the copper demand for AI data centers can be formed within two to three years. S&P Global expects total global copper consumption to increase from 28 million tons in 2025 to 42 million tons in 2040.
Burry believes that Ero is a high-cost copper producer, and if copper prices remain high, their profit margins may expand significantly. “Ero common stock is right for me,” he wrote in a subscription post, calling it a medium sized position.
Ero maintained the 2026 production guidelines at 67,500 to 77,500 tons, and the C1 cash cost was $2.15 to $2.35 per pound. Burry also praised the management team that took office in early 2025, saying it had delivered on “three promises that were quite difficult to fulfill,” adding that the forensic review of the company's accounting treatment “found no issues.”
Although ERO shares have more than doubled in the past year, Burry believes that the company's valuation is significantly discounted compared to larger copper miners. On Stocktwits, retail investor sentiment towards ERO has varied between “neutral” and “bearish” over the past week, although the number of posts has doubled, and the number of followers of the stock has increased by 5% over the past month, indicating that retail interest is rising.
Bury also stated that it will focus on supporting Brad Jacobs' merger and acquisition integration layout for QXO. Bury also holds QXO common shares, as well as Series B mandatory convertible preferred shares with a mandatory dividend rate of 5.5%. “The stock price has dropped drastically, and I see an opportunity to get involved,” he said.
QXO, led by Joint Leasing and XPO founder Brad Jacobs, is consolidating the fragmented building materials distribution market through successive acquisitions. Burry believes that scaling up and solid execution may drive a revaluation, even though the stock is still “affected by disturbances in the housing market and interest rates, not to mention disturbances in diesel prices.”
Bury favors QXO's preferred stock, saying that its current dividend yield is 7.4% and that dividends are cumulative. Unless converted in advance, these securities will automatically be converted to common shares, and delivery will be completed on or around May 15, 2028. “The appeal of common shares and preferred shares is roughly the same, but I like the degree of downside protection that dividends provide,” he said.
On Stocktwits, retail sentiment about QXO rose from “bullish” a week ago to “extremely bullish,” while monthly postings surged 467%, and the number of followers for the stock increased 4%.
Bury increased his holdings in Australian online furniture retailer Temple & Webster, which is traded on the OTC market under the TPLWF code, which he called “a significant position.” The stock fell about 82% over the past year due to market concerns about housing and consumer spending. Revenue for the 2026 fiscal year increased 11% to $665 million, while net profit fell 62% to $4.3 million. Barry said he plans to release the full investment logic soon.
The investor, which focuses on shorting, also “slightly increased” Sprouts Farmers Market and Shuoten to complete this round of buying arrangements. Sprouts shares have fallen by about 43% over the past year, and Shuoten's stock price has fallen to a standstill against the backdrop of weak demand for companion animals and lower performance guidelines. Burry said that Shoteng “has always been appreciated by me,” but now it is “extremely unpopular” in the market. It is neither boosted by the pandemic, nor is it related to AI, and currently lacks any “popularity” in the market.
On Stocktwits, retail investor sentiment towards Shuo Teng was still “bearish” in the past week, and the number of posts dropped 75%, but the number of followers for the stock increased 9% over the past month. Meanwhile, retail investors' sentiment towards Sprouts improved from “bearish” a day ago to “neutral,” but it is still below the “bullish” level a week ago; the number of posts dropped by 67%, while the number of followers remained basically the same, increasing by only 0.1% over the past month.
The “big short” reverse investment map: short on AI valuations, but at the end of AI is electricity — behind electricity is copper
While questioning the valuation and profit quality of some popular AI computing power stocks, Michael Berry chose to be optimistic about the demand for power grids and distribution systems in a context where the AI data center construction process is in full swing, and the driving effect of power grid and distribution system expansion on copper demand is favored by Bury and is looking for investment opportunities.
Michael Berry's core positive rationale is that supply response is slow: it may take about 18 years from discovery to production for copper mines to be put into operation in recent years, and data centers can be built and operated within two to three years, and there is a clear time difference between new procurement demand and mine supply. S&P Global expects global copper demand to increase by about 50% from 28 million tons in 2025 to 42 million tons in 2040, including the combined contributions of AI, electrification, and other economic activities. As a result, Bury's copper investment is looking for a resource link where construction needs can be met and supply is difficult to expand rapidly.
Implementing Ero Copper, he is betting on profit elasticity brought about by copper prices combined with improvements in the company's operations. The company confirmed the 2026 copper production guideline of 67,500 to 77,500 tons, the C1 cash cost was 2.15-2.35 US dollars per pound, and it is expected that production will be high in the second half of the year and costs will decrease as operations improve.
According to Bury's latest judgment, Ero still has valuation discounts compared to larger copper miners. Its higher cost means that the initial profit margin is smaller. When production, sales and costs are controlled, rising copper prices can bring strong profit increases; when the management team fulfills operating promises, it increases company-level support for this price flexibility. This forms an investment idea combining the three factors of “resource supply and demand, management improvement, and valuation discount.”
Copper mining companies that have production resources, can execute production expansion projects, and stable supply networks are expected to receive more lasting demand support in the large-scale AI inference process. As inference calls, smart tasks, and the scale of online services expand, computing power requirements will be transmitted to server capacity, power supply, and distribution construction.
The IEA (International Energy Agency) recently estimates that global data center electricity consumption will nearly double from 485 terawatt-hours in 2025 to 950 terawatt-hours in 2030. Copper thus enters links such as power cables, transformer windings, power distribution equipment, and rack busbars, etc., and its conductivity helps control the resistance loss of high-power equipment; short-range high-speed interconnections within the rack also use copper cables and related connecting components. For example, the Nvidia GB200 NVL72 uses copper cable boxes to connect to the inside of the rack.
Power supply infrastructure forms the main demand for copper usage, and high-speed copper interconnections reflect the added value of AI technology around signal integrity and high-speed connectors and cable manufacturing within data centers. At the same time, long-distance links within data centers are also accelerating the expansion of the penetration rate of optical interconnect devices and CPO technology. Corresponding to corporate profits, miners mainly gain profit flexibility from scarce resources, sales volume, and copper prices. Traders mainly get opportunities for supply organization, logistics, financing and price difference management, while high-speed cable manufacturers obtain the value of product upgrades.
The remaining four companies reflect the logic of value restoration and capital allocation. The appeal of QXO comes from Brad Jacobs' experience in integrating the distributed building materials distribution market, as well as the efficiency improvements and valuation revaluation that may occur after scaling up; Bury also holds common shares and Series B compulsory convertible preferred shares with a fixed dividend rate of 5.5%, and 7.4% is the current dividend yield calculated at the price at the time. Temple & Webster, Sprouts Farmers Market, and Shuo Teng represent the reverse layout of household consumption, food retail, and animal health, respectively.