Michael Burry, the investor known for predicting the 2008 financial crisis, appears to have profited from his bearish bets against AI chip stocks after the iShares Semiconductor ETF (SOXX) fell 21% in July.
On June 30, Burry announced on Substack that he had shorted the SOXX at approximately $643 and refreshed bearish put options. The ETF, which tracks a basket of major chip stocks including Nvidia, AMD, Micron, and Intel, closed at $505 on July 31. The VanEck Semiconductor ETF (SMH) also posted its worst July performance in 30 years, according to data cited by financial commentator Larry McDonald. The SMH declined 17.59% over the last 30 days, while SOXX rose 0.6% on August 4.
Burry had previously warned in his June 30 post that the Philadelphia Semiconductor Index was the most overextended since 2000, citing a price-to-sales ratio exceeding 16 and a premium to its 200-day moving average. He described the SOXX as a "pure form of overvaluation in an index" and extended his bearish positions by rolling puts expiring in March 2027 with strike prices in the low-to-mid $400s.
McDonald, author of The Bear Traps Report and former Société Générale strategist, publicly praised Burry’s wager on social media platform X, calling it "bravo." Burry’s strategy has drawn attention amid broader skepticism about the sustainability of AI-driven stock valuations. His Substack posts, where he outlines personal portfolio moves, have become a focal point for investors tracking contrarian bets.
The semiconductor sector’s decline in July marked its worst monthly performance since 2008, reinforcing Burry’s bearish thesis. While SOXX showed a minor rebound, analysts note that the broader trend reflects concerns over valuation excesses in AI-related equities.