"The Beginning of the End": An Investor from "The Big Short" Has Started Shorting Tesla and Three Other Stocks
Burry believes the artificial intelligence and semiconductor markets are overheated / Photo: Unsplash / Paul Steuber
Investor Michael Burry, who rose to fame after predicting the 2008 mortgage crisis and became the inspiration for the protagonist in the book and film “The Big Short,” has opened a series of short positions, claiming that the artificial intelligence and semiconductor markets are overheated. He disclosed the new trades on his blog, Cassandra Unchained, on Substack:
“Today I opened a short position in Caterpillar stock at $1,060.98,” the investor wrote on June 30. He noted that in the past, shares of the construction equipment manufacturer had yielded good returns for him, but he had never shorted them before.
Burry also shorted the iShares Semiconductor ETF (SOXX), an exchange-traded fund focused on the U.S. semiconductor sector, at $642.80.
Separately, he opened short positions in Nvidia at $198.09 and Applied Materials at $729.40. Both of these companies are part of the SOXX index.
"Finally, I opened a short position in Tesla stock at $416.22. I'm glad the price has returned to that level," he said.
Burry did not disclose the size of these positions. He also reported that he had changed the maturity of his SOXX put options from January 2027 to March 2027, and the strike price from approximately $300 to just over $400. This move gives him more time for his prediction of a microchip market crash to come true.
Context
The quarter that ended yesterday was the best for U.S. stocks since 2020. The S&P 500 broad-market index rose 14.9% during this period, while the Nasdaq index rose 21.4%. Exchange-traded funds focused on the semiconductor industry posted record returns: the iShares Semiconductor ETF (SOXX) rose 94%, and the VanEck Semiconductor ETF (SMH) rose approximately 70%. Applied Materials’ stock rose by more than 100% over the quarter, while Caterpillar— considered one of the beneficiaries of the AI boom due to demand for data center generators—rose by 45%.
Burry believes that the artificial intelligence and semiconductor markets have already become overheated. The Philadelphia Semiconductor Index is trading about 65% above its 200-day moving average, the investor wrote in his blog. According to him, such a level has previously been observed only during the dot-com bubble in 2000.
“The immediate cause of today’s rally is the massive spending [on semiconductors] in South Korea. Well, I see this as the beginning of the end,” Burry wrote. “Now it’s just a matter of time.”
This isn’t the first time Burry has bet against the AI sector. He previously held put options on Nvidia and SOXX. The investor explained this by noting that the market is mistaking a temporary shortage of memory chips for a long-term norm, while manufacturers have locked themselves into multi-year contracts based on future demand that may not materialize. In his view, when the cycle reverses, the industry will quickly shift from a shortage to a surplus of supply.
This article was AI-translated and verified by a human editor
