Michael Burry, known for shorting the 2008 housing bubble, has opened short positions in major AI-linked stocks including Caterpillar, Nvidia, and the semiconductor ETF SOXX, citing concerns that valuations have run far ahead of fundamentals. The announcement immediately pressured these stocks, with Caterpillar falling nearly 7% and Applied Materials dropping more than 11%, signaling that some investors now question whether the AI rally—which has driven semiconductor stocks up 101% in the first half of the year—can be justified by actual business performance.
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Investor Michael Burry disclosed short positions in Caterpillar, Nvidia, Applied Materials, the iShares Semiconductor ETF (SOXX), and Tesla. Caterpillar fell nearly 7% after Burry announced the short at $1,060.98, just after the stock closed at an all-time high of $1,064.90. Applied Materials dropped more than 11%, SOXX fell more than 6%, and Nvidia slid 3.3% on the same day.
Why it matters
Caterpillar had rallied more than 150% over the past 12 months as investors linked its power equipment business to AI data-center buildout. Burry's move signals concern that AI-linked stocks could be running ahead of fundamentals. He called SOXX a rare form of index overvaluation and pointed to the chip index's unusually high extension above its 200-day moving average, suggesting semiconductor valuations may have become detached from actual earnings growth.
What to watch
The Philadelphia Semiconductor Index rose 88% in the second quarter and 101% in the first half. Burry's positions indicate he believes these gains are not sustainable; investors tracking AI-related holdings should monitor whether the sector's valuation premium persists or corrects.
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