The markets are highly vulnerable to a selloff in tech stocks. In October, tech stocks tracked by Bank of America contributed more than 90% of the S&P 500’s total return for the month, according to analysts Savita Subramanian et al. The Magnificent 7 stocks alone contributed 80%.

Now Michael Burry, the investor who famously predicted the subprime-mortgage bubble bursting two decades ago, is betting that two stocks at the heart of the artificial-intelligence trade are set for ...