‘The Big Short’ Michael Burry Bets on a Drop in Tesla and Semiconductors Amid AI Bubble Talk

[Financial News] Michael Burry, the investor who predicted the 2008 global financial crisis and became the real-life model for the film 'The Big Short,' has sharply expanded his bearish bets against the artificial intelligence (AI) market.
As skepticism grows over the recent AI frenzy, Burry's move is expected to send shockwaves through the market.
On the 1st local time, The Wall Street Journal (WSJ) reported that Burry, head of Scion Asset Management, recently disclosed new short positions targeting Tesla, Caterpillar, Applied Materials, and an exchange-traded fund (ETF) that tracks semiconductor stocks. The bets are part of a months-long, large-scale strategy designed to generate substantial profits if the AI boom fades.
Burry's move came at a delicate moment for the AI industry, which is facing headwinds both inside and outside the sector. The U.S. government has recently moved to restrict the launch of Anthropic's next-generation 'Mythos'-class AI model, citing national security concerns. At the same time, big tech companies such as Microsoft, burdened by the enormous cost of maintaining AI infrastructure, have begun rolling out lower-cost options, signaling that the market's 'sticker shock' is now taking hold.
In particular, Burry is said to have become convinced of an 'AI bubble burst' after seeing the massive investment plans announced recently by South Korea's semiconductor giants. Samsung Electronics and SK hynix recently unveiled plans to invest more than $500 billion to build a huge semiconductor mega-cluster. Semiconductor stocks surged immediately after the announcement and lifted the NASDAQ Composite Index, but Burry saw it differently.
On the 30th of last month, Burry said on Substack, "The direct cause of the recent stock rally is the massive investment plan announced by Korea. But in my view, this is only the 'beginning of the end.'"
He has strongly criticized investors for inflating the valuations of some leading AI stocks and turning a blind eye to potential risks.
Looking at Burry's specific positions, he bought put options on an ETF that tracks the Philadelphia Semiconductor Index, which includes Micron Technology and AMD. The bet is structured to pay off in March next year if the SOXX index falls to about one-third of its peak level.
Burry said, "The SOXX index itself is a textbook case of overvaluation," adding, "Historically, bubbles this easy to spot are extremely rare."
Caterpillar, the construction and mining equipment maker, was also targeted. Its stock has risen sharply over the past few months, benefiting from AI data centers and expanded semiconductor plant construction, but Burry judged that it had also become overheated.
He has also turned his attention back to Tesla, after previously placing a bearish bet on the company. Burry set a target price of $416.22 for Tesla, which is betting everything on perfecting autonomous driving technology, and predicted a decline.
He also added to his short position in NVIDIA, which he has held since last November.
At the time, Burry warned that NVIDIA's 'circular financing' deals with some major customers could lead to an explosion similar to the collapse of the dot-com bubble. As for another target, Palantir Technologies, he argued that its heavy dependence on government contracts makes it highly vulnerable to being replaced by competitors.
Those warnings drew a strong backlash from the industry. NVIDIA denied that there was any problem with its financial structure, and Palantir CEO Alex Karp appeared on CNBC and lashed out at Burry, calling him "completely crazy."
So far, Burry's predictions have had mixed results. NVIDIA, which remains the world's most valuable company by market capitalization, has fallen only about 5% since the time of his short disclosure. Palantir's stock, however, has plunged about 40% from that point, suggesting that Burry's judgment has been on target, the Journal reported.

jjyoon@fnnews.com Yoon Jae-jun Reporter