Michael Burry, the founder of Scion Asset Management and the real-life inspiration for 'The Big Short', has significantly increased his bearish bets against the AI sector. In a recent disclosure, he revealed the average entry prices for five short positions: Tesla at $416.22, Caterpillar at $1,060.98, Applied Materials at $729.40, Nvidia at $198.09, and the iShares Semiconductor ETF (SOXX) at $642.80. This move represents a broad short against the entire AI infrastructure theme rather than a single company.
Korean Chip Announcement Triggers Entry
Burry explicitly cited South Korea's massive semiconductor investment plan as the trigger for increasing his shorts. He stated: 'The proximate cause of today's rally is big spending announced out of Korea. Well, I see that as the beginning of the end. It is only a matter of time now.' While the market interpreted the news as bullish for AI supply chain acceleration, Burry viewed it as a sign of overheating. Notably, he said this is his first time shorting Caterpillar, citing an 86% share price surge in the first half of 2026 and a price-to-sales ratio at a 30-year high, far exceeding fundamental support.
Philadelphia Semiconductor Index 65% Above 200-Day MA
Burry pointed out that the Philadelphia Semiconductor Index (SOX) is currently trading about 65% above its 200-day moving average. He noted that the last time such a deviation occurred was at the peak of the dot-com bubble in 2000, just before the Nasdaq crash. He had already established short positions in Nvidia and Palantir via put options in November 2025, including 1 million shares of Nvidia puts at a strike price of $110 expiring in 2027, and Palantir puts with strikes of $100 (end of 2026) and $50 (mid-2027). These strikes are well below current market prices, indicating a bet on deep, long-term declines.
Accuses Hyperscalers of Understating Depreciation by $176 Billion
Burry also took aim at the accounting practices of hyperscale cloud providers (AWS, Microsoft Azure, Google Cloud). He alleges these companies are systematically extending the useful life of AI chips to understate annual depreciation expenses, thereby inflating reported profits. He estimates that the AI industry as a whole will underreport approximately $176 billion in depreciation expenses between 2026 and 2028. This suggests that a significant portion of the AI profit growth seen by markets is built on accounting assumptions. Scion Asset Management filed to deregister with the SEC at the end of November 2025, freeing Burry from formal fund structure constraints. He now publicly reveals his holdings and views on X and his Substack 'Cassandra Unchained', speaking more directly and expanding his target list.