After Calling Tesla a Bubble, Michael Burry Warns of a Semiconductor Bubble

Michael Burry, the U.S. investor best known as the real-life figure behind “The Big Short,” warned that the stock market is overheating amid the artificial-intelligence frenzy.

In a social media post on May 8, Burry wrote that it was “nonstop AI talk.” Recounting a long drive while listening to business broadcasts, he said he did not hear anyone discuss any other topic all day.

The market is no longer moving on economic fundamentals such as the jobs report or consumer-sentiment data, he wrote. Instead, stocks are climbing on momentum simply because they have already risen.

He added that the market is being whipped around by a two-letter theme — AI — that everyone thinks they understand. To him, it feels similar to the final phase of the 1999-2000 dot-com bubble.

On the same day, the S&P 500 hit another record after U.S. April employment data came in stronger than expected. The market also shrugged off a drop in the University of Michigan’s consumer sentiment index to a record low.

Semiconductor shares have continued setting fresh highs despite geopolitical risks in the Middle East. The Philadelphia Semiconductor Index, which includes Nvidia, Broadcom, Intel, Micron and TSMC, has surged about 40% over the past month. Gains were especially strong in traditional central processing unit and memory-chip makers such as Intel, AMD and Micron.

On April 24, Burry also signaled that he had taken a short position on the semiconductor sector. He wrote that if investors were holding long positions in chip stocks, now was the time to sell.

After the market close that day, he disclosed what he called a new position: a large purchase of January 2027 $330 put options on the iShares Semiconductor ETF, SOXX. The trade amounts to a bet that SOXX, currently around $455, will drop roughly 30%.

Burry also described the current market action as a textbook technical phenomenon. The 18-session winning streak, he argued, reflects technical factors rather than fundamentals.

Burry made a fortune by correctly predicting the collapse of subprime mortgages during the 2008 U.S. financial crisis and betting against the housing market. His story was later turned into the 2015 film “The Big Short.”

Wall Street, however, has been cautious about embracing his latest call. Several of his bearish forecasts since the 2008 crisis have missed the mark. In 2021, Burry called Tesla’s stock a “bubble.” Elon Musk, Tesla’s chief executive officer, responded by mocking him as a “broken clock.”

Kim So-yeon, Hankyung.com reporter sue123@hankyung.com