Michael Burry Takes Massive Short Positions Against AI Stocks, Warns of Bubble

Key Takeaways

• Michael Burry has opened short positions targeting AI-related stocks such as Applied Materials, Tesla, Caterpillar, and a major semiconductor ETF
• The investor described Samsung and SK Hynix’s $500 billion semiconductor manufacturing investment as “the beginning of the end”
• Burry initiated a dedicated short against Micron stock, pointing to cyclical market patterns and rally levels reaching “historically extreme” territory
• The investor shared comparative charts linking the AI stock surge to the dot-com bubble collapse and 2008 financial crisis
• Major technology companies are projected to invest approximately $700 billion in AI-related infrastructure throughout this year

Michael Burry, whose prescient housing market bet was immortalized in “The Big Short,” has initiated substantial bearish positions targeting the artificial intelligence sector.

Toward the end of June, Burry disclosed short positions involving Applied Materials, Tesla, Caterpillar, and the iShares Semiconductor ETF. According to The Wall Street Journal, these positions were announced through his Substack publication, “Cassandra Unchained.”

Tesla, Inc., TSLA

The semiconductor-focused ETF represents a comprehensive wager against AI sector momentum. The fund’s largest components include Advanced Micro Devices, Micron, and Nvidia. Over the previous twelve months, the ETF has surged more than 130%.

In addition to the ETF position, Burry established an individual short on Micron shares. His rationale centered on the company’s historically cyclical business patterns and valuations he characterized as reaching “historically extreme” heights.

Burry’s skepticism intensified following reports that South Korean technology giants Samsung and SK Hynix announced plans for a $500 billion chip manufacturing complex. While the news propelled technology stocks upward, Burry countered on Substack by labeling it “the beginning of the end.”

This marks a continuation of his AI skepticism. Previously, Burry established bearish trades against Nvidia and Palantir Technologies, two companies riding the wave of substantial AI infrastructure investment.

Burry’s Historical Comparisons Between AI and Previous Speculative Manias

Through social media channels, Burry shared multiple data visualizations drawing connections between today’s AI enthusiasm and historical speculative cycles.

One visualization depicted the global machine learning market expanding from below $1 billion in 2011 to approaching $90 billion by 2025. His commentary was sardonic, mocking the assumption that AI stocks represent a one-way bet.

Another chart illustrated U.S. residential real estate values preceding the 2008 financial meltdown. A third visualization tracked internet adoption rates throughout the 1990s before the technology bubble burst.

Burry stopped short of explicitly labeling AI a bubble. Instead, he implied that markets frequently take legitimate secular growth trajectories and inflate valuations far beyond what underlying economics can support.

The technology sector anticipates deploying nearly $700 billion toward AI-related infrastructure throughout 2025. Burry and other skeptics have raised questions about whether projected revenue streams justify such massive capital expenditures.

Despite the warnings, certain AI stocks have delivered extraordinary returns. Micron shares climbed 300% during the year’s first half. Sandisk posted gains exceeding 800% over the identical timeframe.

Burry’s 2008 housing short proved prescient, though he entered the position years before the collapse. Even sophisticated investors struggle with timing when betting against prevailing market sentiment.

His current short positions signal his conviction that AI stock valuations have extended beyond sustainable levels, following patterns he recognizes from previous market cycles.

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