Michael Burry's short of the iShares Semiconductor ETF (SOXX) at $643 paid off with a 21% drop in July. He has doubled down and holds puts targeting the low-to-mid $400s by March 2027.
Michael Burry's bet against semiconductor stocks is paying off.
The investor of "The Big Short" fame said in a June 30 Substack post he had shorted the iShares Semiconductor ETF (SOXX) at roughly $643 and refreshed his put options on it. The exchange-traded fund tracks the NYSE Semiconductor Index, a basket that includes Nvidia, AMD, Micron, and Intel.
Over the next month, SOXX fell 21% to close at $505 on July 31. It rose 0.6% on Monday.
Larry McDonald, author of "The Bear Traps Report" and former head of US macro strategy at Société Générale, praised the trade in a Saturday post on X. He noted that the VanEck Semiconductor ETF (SMH) posted its worst July in 30 years, down 17.6%. He tagged Burry and wrote "bravo."
Burry laid out his reasoning in that June post. The Philadelphia Semiconductor Index was the most overextended relative to its 200-day moving average since 2000, he wrote. Its price-to-sales ratio sat above 16, which he called "very high." He labeled SOXX a "pure form of overvaluation in an index."
He structured the bet to run deep. In addition to the short, he rolled put options to March 2027 expiration with strike prices in the low-to-mid $400s. That signals he expects the index to fall to those levels by then – roughly another 20% from the current price.
Burry has doubled down since the initial trade. He said in a July 24 post that he'd added to his short at around $536, calling it a "large position" alongside his puts. On July 30, he ramped it up again at roughly $506, writing that the bullish chip trade had "lost momentum" and was starting to "look tired."
He has also disclosed bets against individual chipmakers, including Nvidia and Micron, along with the broader Nasdaq 100.
Burry's broader skepticism of the AI boom is well documented. He has warned that hyperscalers like Meta and Alphabet are overspending on microchips and data centers that could become obsolete in a few years. He has called out AI giants for signing what he describes as "give-and-take" contracts to keep fueling hype.
Burry provides more real-time trade updates than most high-profile investors give their clients. He does not disclose dollar amounts, so the exact profit from his chip wager remains unknown. He did not answer questions from Business Insider before publication.
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