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Michael Burry increases bearish bets on semiconductor stocks as AI trade faces valuation scrutiny

Investor Michael Burry has disclosed a series of portfolio changes, notably deepening his bearish bets on major semiconductor assets including Micron Technology and Nvidia. Burry argued that the current rally in these stocks was driven by fear of missing out and the greater fool theory rather than underlying fundamentals, warning that AI chip stocks could face a 30% correction. While bulls argue that Micron is transitioning into an infrastructure operator with recurring revenue, Burry remains skeptical of the current valuations. He noted that much of the current and future demand is financed off-balance sheet, suggesting that the global AI trade may be facing a circular financing arrangement. These adjustments come as Moody's flags mounting debt risks and heavy capital spending by hyperscalers like Microsoft and Amazon. Despite his bearish outlook on semiconductors, Burry maintained his short positions on Tesla and Palantir Technologies, while expanding long investments in Flutter Entertainment and DraftKings.

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