Michael Burry warned that AI and semiconductor stocks could decline by as much as 30%, arguing that the sector is exhibiting valuation extremes similar to those seen during the dot-com bubble.
In a post on Substack, Burry said the Philadelphia Semiconductor Index is trading at one of its highest levels relative to its 200-day moving average since 2000, suggesting investor enthusiasm has become excessive.
Bearish Bet on Semiconductors
Burry also disclosed that he rolled his bearish put options on the iShares Semiconductor ETF (SOXX) from January 2027 to March 2027, extending the duration of his wager while keeping costs relatively low.
According to Burry, the ETF is trading at more than 16 times revenue, while semiconductor valuations remain historically elevated even excluding Nvidia.
New Short Positions
Burry also revealed new bearish positions in several companies and funds, including Nvidia, Tesla, the iShares Semiconductor ETF, Caterpillar, and Applied Materials.
The positions reflect his view that investors have become overly optimistic about AI-related companies following the sector’s powerful rally.
The broader takeaway is that one of Wall Street’s best-known contrarian investors believes valuations across AI and semiconductor stocks have reached unsustainable levels, increasing the risk of a significant correction.
