Business

Michael Burry's newest short reveals what really worries him about AI

By Faizan Farooque TheStreet

Updated July 2, 2026 7:20 AM

The AI trade isn't just about Nvidia anymore.

That could be the true warning sign underlying Michael Burry's current move on the markets.

The investor behind "The Big Short" has revealed new bearish positions against Tesla (TSLA), Nvidia (NVDA), Caterpillar (CAT), Applied Materials (AMAT), and the iShares Semiconductor ETF (SOXX), according to the Wall Street Journal. He also had bearish put options on the tech-heavy Nasdaq 100 through exposure to QQQ.

On the face of it, that sounds like a conventional anti-AI bet.

But there is more to the basket. Burry isn't just targeting chip euphoria. He's going after the way AI hype has tainted electric vehicles, industrial equipment, semiconductor-making gear, and broad tech indexes.

That makes the trade less a call on a stock and more a call on the market.

The implication appears to be that investors could be crowning too many businesses as AI winners at the same time.

"The SOXX itself is a pure form of overvaluation in an index, a form that is rarely seen and never so easily recognized as such," he said, as the Journal reported, giving retail investors a nuanced view regarding his moves vis-à-vis the AI boom.

Michael Burry expands his AI bubble bet beyond Nvidia

Burry's most recent short takes on issues that affect practically every tier of the AI boom.

First is Nvidia, of course. The chipmaker continues to represent the public face of AI infrastructure, and its financial results show why investors have been eager to follow the stock upward.

Nvidia reported record revenue of $81.6 billion for its fiscal first quarter ended April 26, up 85% from a year ago. Data Center revenues were $75.2 billion, up 92% year over year.

Those are not weak numbers, and that's the point.

Burry is not just betting against broken businesses. He seems to be betting against stocks for which investors may have already priced in an ultra-optimistic version of the AI future.

Applied Materials follows the same pattern. The company is a direct beneficiary of semiconductor capital spending as a seller of critical chipmaking equipment. Revenue in the fiscal second quarter was a record $7.91 billion, up 11% year over year, and GAAP earnings per share were a record $3.51.

There is real momentum in the business. The question is whether the stocks are moving at an even quicker rate.

SOXX shows why Burry is targeting chip euphoria

SOXX offers investors a wide approach to play the semiconductor trade.

That also makes it a straightforward target for a negative investor who thinks chip euphoria has gotten ahead of itself.

The iShares Semiconductor ETF covers a U.S. equity index of semiconductor companies, including those leading AI innovation and benefiting from digital-infrastructure capital spending, according to BlackRock.

The fund's recent figures highlight why it is important to Burry's case.

SOXX's NAV on June 30, 2026, was $640.65, on the high end of its 52-week range of $236.94 to $655.22. Its NAV total year-to-date return was 113%.

Michael Burry's latest AI short targets

Tesla (TSLA): A fresh short against the electric-vehicle maker, Business Insider notes
Nvidia (NVDA): A bet against the clearest symbol of AI chip demand
Caterpillar (CAT): The surprise short that shows how far the AI trade has spread
Applied Materials (AMAT): A semiconductor-equipment target tied to chip-factory spending
SOXX: A broad bet against semiconductor stocks
QQQ: A wider wager against the tech-heavy Nasdaq 100

That's a massive move for an exchange-traded fund, not just one speculative stock.

BlackRock also listed SOXX at a price-to-earnings ratio of 76.39 and a price-to-book ratio of 13.23 as of June 30. The fund had a three-year equity beta of 2.01, showing how volatile it can be relative to the broader market.

Burry seems to be betting against stocks for which investors may have already priced in an ultra-optimistic version of the AI future.

Bloomberg / Getty Images

Caterpillar reveals the bigger AI market problem

The most important name in Burry's latest basket may not be Nvidia; it may be Caterpillar.

Caterpillar is not a chip producer. It's best recognized for construction, mining, and heavy equipment. But the company is part of the AI infrastructure story because data centers need power, and lots of it.

That connection is not theoretical.

In January, American Intelligence & Power, Caterpillar, and Boyd CAT established a strategic agreement for 2 gigawatts of dedicated power for hyperscale AI infrastructure. AIP bought 2 gigawatts of fast-response natural gas generator sets with delivery slated from September 2026 through August 2027, Caterpillar stated.

Investors, accordingly, started to see Caterpillar as an AI-adjacent winner.

After all, data centers need more than just Nvidia chips. They need power, back-up, and industrial-grade equipment that can cope with huge and variable power demands.

More AI:

It's why Burry's Caterpillar short is such a handy indication.

A negative bet against Nvidia can be written off as a call against chip valuation. Betting pessimistically on Caterpillar shows something else: The excitement around AI has shifted from pure technology equities into the old-line industrials, whom investors perceive as the picks-and-shovels benefactors.

That doesn't mean Burry will be right, but it does mean he's targeting the second and third derivatives of the AI trade, not the obvious first wave.

Tesla and QQQ make Burry's warning broader

Tesla is another example of how AI has changed expectations for investors.

Cars are still a benchmark for the company, but investors are beginning to value Tesla more for autonomy, robots, software, and energy storage. That makes it a part-automobile, part-AI story.

Tesla claimed it manufactured more than 408,000 vehicles in the first quarter of 2026, delivered more than 358,000 vehicles, and deployed 8.8 gigawatt-hours of energy storage devices.

While those operating metrics still matter, Tesla's valuation dispute is increasingly about more than just vehicles. Investors are also debating robotaxis, autonomous driving, humanoid robots, and energy infrastructure - all themes linked to the bigger AI story.

QQQ makes the bet much bigger. The ETF mimics the Nasdaq-100 index and is passively managed, offering investors exposure to many of the industry-leading firms with one investment, Invesco explains.

The business also points out that as of March 31, 2026, the ETF was the second most-traded ETF in the U.S. by average daily volume.

This means Burry's QQQ put is not a single-name trade. It represents a broader wager on the growth-stock complex, which AI optimism has buoyed.

Michael Burry's warning is bigger than one stock

The read-through to the public markets is not that investors should mimic Burry's trades. That could be risky, since shorting is a tough business, and put options might expire worthless.

Burry has been early before, but this latest list of targets can't be ignored.

Nvidia revealed an 85% sales increase in its most recent quarter. Applied Materials reported record quarterly sales. SOXX is up roughly 2x year to date, according to 24/7 Wall St. Caterpillar has a true link to AI power infrastructure with a 2-gigawatt generator agreement, Bloomberg Podcasts reported. Tesla is still hitched to hopes of autonomous driving, robotics, and energy storage.

Those aren't broken enterprises, and it's why the trade is interesting. It looks like Burry is betting that investors have already priced in too much future growth in too many sectors of the market.

His shorts now include chips, chipmaking equipment, industrial power, electric cars, and wide tech exposure. Far from an arbitrary basket, it's a map of the AI rally's whereabouts.

And his warning is clear: If AI risk is so widely dispersed, the rise may be bigger than Wall Street thinks, and more unstable.

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This story was originally published July 2, 2026 at 7:07 AM.