Michael Burry Shorts Chipmakers — Is an AI Market Crash Coming?

Burry’s Big Short 2.0: AI Chipmakers in the Crosshairs

Michael Burry — the contrarian investor whose prescient bet against the US subprime mortgage market in the mid-2000s was immortalised in the book and film ‘The Big Short’ — has made headlines once again. According to reports published on July 8, 2026, Burry has increased his short bets against a cohort of the world’s most prominent AI-linked semiconductor companies, including Nvidia, AMD, and Micron, primarily through the iShares Semiconductor ETF.

The Mechanism: Shorting the ETF

Rather than taking individual short positions against each chipmaker, Burry’s approach via the iShares Semiconductor ETF allows him to express a broad bearish view on the semiconductor sector as a whole. The ETF tracks a diversified basket of chip stocks, and a short position on the fund profits if the underlying holdings — which include some of the most valuable technology companies in the world — decline in aggregate value.

This is notable because Nvidia, AMD, and Micron are among the primary beneficiaries of the explosive demand for AI hardware. Data centres around the world have been aggressively procuring graphics processing units (GPUs) and high-bandwidth memory chips to power the training and deployment of large language models and other AI systems. The resulting surge in revenue and earnings expectations has driven these stocks to valuations that some analysts consider stretched.

The Bull vs Bear Debate on AI Chips

Burry’s move crystallises a debate that has been simmering in investment circles throughout 2026. On one side are those who argue that AI infrastructure spending is still in its early innings, that demand for advanced chips will remain structurally elevated for years, and that current valuations — while high — are justified by the earnings growth trajectory ahead.

On the other side are sceptics who contend that the market may be over-extrapolating near-term AI enthusiasm into permanent demand, that customer capital expenditure on AI infrastructure cannot sustain its current pace indefinitely, and that a significant inventory correction — similar to those seen in past semiconductor cycles — could be around the corner.

Burry’s positioning firmly places him in the latter camp. His track record means that even when his calls are early — as they often are — they are taken seriously by institutional and retail investors alike.

India Context: Chip Stocks and Indian IT

For Indian market participants, the Burry short has two layers of relevance. First, Indian investors with exposure to US tech through international mutual funds or ETFs could see portfolio impacts if a broader AI correction materialises. Second, Indian IT companies that are building AI practices and selling services around Nvidia and other chipmakers’ platforms may also face indirect headwinds if enterprise AI spending moderates.

Earlier in July, Indian chip-linked stocks had already faced selling pressure amid global concerns about the AI rally — today’s broader market crash amplified those concerns.

Note: This article is for informational purposes only and does not constitute investment advice.

For information only and not investment advice. Summarised from the cited sources; figures may be delayed. Do your own research before investing.