Michael Burry’s bearish bet on semiconductor stocks pays off

Burry’s skepticism centers on the Philadelphia Semiconductor Index, which he noted was at its most overextended point since 2000. Citing an inflated price-to-sales ratio exceeding 16 and a significant premium to its 200-day moving average, he labeled the sector a bubble. By July 31, the SOXX fund had tumbled to $505 from his initial entry point of approximately $643, prompting praise from market analysts like Larry McDonald, who noted the sector suffered its worst July performance in three decades.

The investor has aggressively expanded his position, adding to his shorts as the index dipped to $536 and again at $506. He has also secured put options expiring in March 2027 with strike prices in the low-to-mid $400s, indicating he anticipates further downward pressure. Beyond the broader ETF, Burry has disclosed specific bets against individual industry players including Nvidia and Micron.

While Burry provides frequent updates to his Substack subscribers, he keeps exact portfolio dollar amounts private. His broader critique remains focused on the sustainability of the current AI boom. He has argued that tech giants like Meta and Alphabet risk overspending on infrastructure that may quickly become obsolete, while suggesting that the interconnected contracts between major AI firms are primarily designed to sustain market hype.