Global chip selloff deepens as Burry’s AI short bets gain traction

Michael Burry, the investor who rose to fame by predicting the 2008 financial crisis, has escalated his wager against artificial intelligence-linked stocks, shorting a basket of chipmakers and warning that "the end is nigh" for the AI trade — a call that gained fresh credibility on Tuesday as a global semiconductor selloff erased billions in market value.

A Broad Bet Against the AI Trade

Burry disclosed in his Substack newsletter on June 30 that he had opened short positions in Nvidia ↘ 9.26% at $198.09, Caterpillar ↗ 0.63% at $1,060.98, Applied Materials ↘ 13.58% at $729.40, Tesla ↘ 10.77% at $416.22, and the iShares Semiconductor ETF ↘ 12.15% at $642.80. Days later, he revealed a direct short in Micron ↘ 17.46% at $1,051.87, calling the memory chipmaker's rally "bubble territory" driven by "fear of missing out, greater fool theory, and public commitment bias".finance.yahoo+3

Over the weekend, Burry intensified his rhetoric on X, writing, "The end is nigh. Dancing with the devil in the pale moon light," a reference to Tim Burton's "Batman". In a series of posts, he described the AI trade as "mass addiction" and warned that "the AI narrative may die a death by a thousand cuts".tipranks+1

Tuesday's Chip Rout Adds Fuel

The timing proved prescient. On Tuesday, a global chip selloff — triggered when Samsung Electronics shares plunged as much as 10% in Seoul despite reporting record quarterly profits — cascaded across world markets. Samsung's forecast of 89.4 trillion won in operating profit failed to satisfy investors who had bid memory stocks to extreme valuations.youtube+2

South Korea's Kospi fell nearly 5%, briefly triggering a circuit breaker, while Japan's Nikkei 225 dropped 2%. In the United States, the Philadelphia Semiconductor Index slid roughly 5%, with Intel ↘ 10.33% and Applied Materials each falling about 10%, AMD Advanced Micro Devices, Inc. ↘ 17.26% dropping 9%, and Micron declining 9%. The Nasdaq Composite closed down 1.2%, while the S&P 500 slipped 0.5%.businessinsider+3

Stretched Valuations Under Scrutiny

Burry's bearish stance extends back months. In May, he compared the current AI-driven market to "the final months of the 1999-2000" dot-com bubble, writing on Substack that "stocks are simply ascending because they have been on an upward trajectory. This is based on a two-letter thesis that everyone believes they comprehend".cnbc

Nvidia, whose stock has fallen roughly 17% from its May peak, now trades at about 21.7 times forward earnings. On Tuesday, selling pressure deepened after SemiAnalysis reported that Nvidia's next-generation Kyber NVL144 system had been delayed to 2028 due to circuit board manufacturing challenges — a claim Nvidia disputed, telling Bloomberg its "roadmap is intact".finance.yahoo+2

As the selling in Korean chip stocks continued into Wednesday, with Samsung and SK Hynix falling as much as 4.4% and 5% respectively, the question facing investors is whether Burry's latest bearish call will prove as consequential as his most famous one — or whether, as critics note, the AI buildout still has years of demand ahead of it.reuters