Image Credit: Reddit
Key Takeaways
- Michael Burry disclosed short positions against Tesla, Nvidia, Caterpillar, Applied Materials, and the semiconductor sector on June 30.
- Days later, the Philadelphia Semiconductor Index dropped more than 6% and Tesla fell 7.5%, though the moves trace to separate catalysts.
- The chip selloff followed reports that Meta is building a business to lease out surplus AI data center capacity.
Michael Burry disclosed a fresh basket of short positions against Tesla, Nvidia, Caterpillar, Applied Materials, and the broader semiconductor sector on June 30. Within days, several of those same stocks and sectors began to slide. Chip stocks, memory names, and Tesla shares all posted sharp losses this week, though the moves trace to separate catalysts rather than Burry’s disclosure itself.
The Setup: A Single Thesis, Five Names
Burry laid out the positions in a Substack post titled “Trading Post June 30, 2026.” He framed the trades as one bet against an overheated AI cycle rather than isolated stock picks, and extended his semiconductor index puts on the iShares Semiconductor ETF out to March 2027.
He also disclosed new shorts on Tesla at $416.22 and Caterpillar at $1,060.98, a stock he said he had never shorted before despite trading it profitably on the long side for years. Burry pointed to Caterpillar’s price-to-sales ratio, which he said had reached its highest level in at least three decades, and to a roughly 86% run in the stock over the first half of the year.
The Philadelphia Semiconductor Index was already trading more than 65% above its 200-day moving average when Burry made the call, a stretch he compared to conditions last seen during the dot-com era. Referring to a wave of Korean chip investment announcements that had helped drive the rally, Burry wrote that he saw it as “the beginning of the end.” Burry did not disclose position sizes or structure for any of the trades.
What’s Happened Since
Days later, reports surfaced that Meta Platforms is building a business to lease out surplus AI data center capacity to outside customers. Some market participants interpreted the move as a signal that compute supply may be starting to catch up with demand.
On Thursday, July 2, the Philadelphia Semiconductor Index dropped more than 6%, one of its steepest single-day declines this year. The selloff spread to Samsung and SK Hynix in Asia and briefly triggered a circuit breaker on South Korea’s Kospi.
Memory and storage names took the hardest hits. SanDisk lost close to 20% over five sessions, while Seagate and Micron also slid on fears of a supply glut as Samsung and SK Hynix ramp up new capacity. Micron’s underlying business has continued to perform, with fiscal third-quarter revenue up 346% year over year, but the stock has given back a chunk of its 2026 gains.
Tesla fell 7.5% that same Thursday, its worst single session in nearly a year. The decline came despite Tesla reporting second-quarter deliveries of 480,126 vehicles, above Wall Street’s consensus estimate. Some traders treated the beat as a sell-the-news event after the stock had already climbed more than 13% over the four sessions leading into the report.
Context Behind the Timing
None of this proves Burry’s short basket caused the moves. The chip selloff traces most directly to Meta’s compute-leasing plans, and Tesla’s drop lines up with a familiar sell-the-news pattern around its delivery report rather than any catalyst tied to Burry.
Still, several of the stocks now under pressure appear in Burry’s short basket, and Caterpillar, his other first-ever short, continues to trade at a trailing price-to-earnings ratio of 53. Whether this marks the start of a broader correction or a rough week for a handful of stretched valuations may become clearer around Tesla’s July 22 earnings report. The next round of AI capital spending commentary from major cloud providers could also offer more clarity.
