Hedge Fund Manager Michael Burry Bets Against AI Stocks Amid Industry Boom Concerns

Michael Burry, the hedge fund manager known for predicting the subprime mortgage crisis and featured in "The Big Short," continues to short AI-related stocks. His current positions include shorting Tesla, Caterpillar, Applied Materials, and an ETF tracking semiconductor manufacturers, according to the Wall Street Journal. These moves are part of a strategy Burry has pursued for several months, aiming to profit if the current enthusiasm around AI fades.

Burry's bearish stance comes at a sensitive time for the AI sector, as the U.S. government restricts the distribution of Anthropic's Mistral model over national security concerns. Meanwhile, companies like Microsoft are launching more affordable AI models to address high usage costs. Additionally, recent announcements by South Korean tech giants Samsung and SK Hynix to invest heavily in new chip manufacturing plants have raised alarms for Burry about the massive capital expenditures in AI infrastructure and whether these investments will pay off.

Following the news from Korea, Burry described the chip stock rally as "the beginning of the end." He has been a vocal critic of the AI stock frenzy, having opened a short position exceeding $1 billion on Nvidia and Palantir last November. Burry argues that investors are rushing too quickly, inflating stock prices of major industry players while ignoring risks. One of his latest bets involves put options on an ETF tracking the semiconductor index, including Micron and AMD, which would be profitable if the ETF drops by about one-third from its peak by March. He called the SOXX index a clear example of overvaluation rarely seen or easily identified.