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.
What happened
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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