It seems the ‘Big Short’ Michael Burry isn’t easing up on his criticism of the AI trade anytime soon.
The hedge fund investor who became famous for betting against the 2008 housing bubble has spent the past few weeks sharpening his attack on AI stocks, and his latest posts pushed that warning into even darker territory.
In his string of scathing social-media posts, he paired sharp language with charts showing a widening gap between chip stocks and the companies shelling out billions to build AI infrastructure.
Over the past few months, Burry has taken AI stocks to the cleaners, building his case around stretched valuations, crowded trades, and a growing divide between AI chip winners and the hyperscalers paying for the buildout.
The big concern is whether investors may have priced the winners as if the spending boom can keep compounding without disappointment.
Why Burry says the AI trade is nearing trouble
Burry’s latest AI troll was apocalyptic, warning of what could be the beginning of a grueling stock market crash.
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According to Seeking Alpha, Burry posted, “The end is nigh,” then added, “Dancing with the devil in the pale moon light,” a reference to Jack Nicholson’s Joker line from Tim Burton’s Batman.
Burry wrote that “the AI narrative is nothing more than mass addiction,” and warned that “the AI narrative may die a death by a thousand cuts, and I have only seen a few dozen so far.”
His charts pointed to two concerns.
AI semiconductor stocks have sharply outperformed the hyperscale cloud companies funding the infrastructure buildout, as well as broader AI beneficiaries. Another chart showed the Philadelphia Semiconductor Index trading near the top of its 15-year valuation range on forward P/E.
Burry argues that chip stocks may have raced ahead of the fundamentals supporting the AI boom.
For perspective, according to Reuters, the chip sell-off hit the tape hard.
The Philadelphia semiconductor index dropped 6.3% on July 1 and another 5.5% on July 2, while the S&P 500 tanked 0.22% and the Nasdaq dropped 0.66% and 0.80%, respectively.
Tony Avelar/Bloomberg via Getty Images
Why Michael Burry is turning harder against AI stocks
Over the past few months, Burry’s AI warning has shifted from a single-name short to a broader attack on the trade’s poster children.
It all goes back to early November last year, when his then-hedge fund, Scion Asset Management, disclosed put options on 1 million Nvidia shares and 5 million Palantir shares, according to Business Insider, betting against two of the biggest names in the AI space with positions valued at $187 million and $912 million, respectively.
Since then, Burry has widened his bet.
According to Business Insider, he recently disclosed bearish positions via put options on some of the biggest names in tech, including Tesla, Nvidia, Caterpillar, Applied Materials, and the iShares Semiconductor ETF.
Memory giant Micron recently became the latest target of this scathing narrative.
As covered by TheStreet’s top tech reporter, Aditya Raghunath, Burry disclosed on July 1 that he had shorted Micron (MU) shares at $1,051.87, according to a Substack post. The bet followed a huge rally, with the stock up nearly 700% over the past year and 241% in 2026.
He framed the move as a bet against a herd-mentality rally, blaming “fear of missing out, the greater fool theory, and public commitment bias”.
Burry’s broader argument is that the AI trade is effectively feeding on itself.
Chip stocks jump primarily because big tech giants spend heavily on AI.
Equipment makers rise because chip companies are building more capacity. Investors then treat every new spending plan as proof that demand will keep growing.
After Samsung and SK Hynix announced a huge chip hub in Korea, The Wall Street Journal quoted Burry saying, “I see that as the beginning of the end.”
He argues that investors might be paying too much, too soon, before it is clear whether all this spending will deliver strong returns.
Burry sees AI spending, chip demand, and momentum-driven valuations as one crowded trade that could fall hard if expectations disappoint.
The insane numbers behind the AI trade
- According to Reuters, Nvidia hit $5 trillion in market value on Oct. 29, 2025, after its shares climbed 12-fold since ChatGPT’s 2022 launch. Essentially, one AI chipmaker became big enough to pull the whole market’s mood with it.
- According to Reuters, Microsoft, Alphabet, Amazon, and Meta together carried more than $10 trillion in market value and made up 17% of the S&P 500 in April.
- According to Axios, Alphabet, Amazon, Meta, Microsoft, and Oracle raised $255.34 billion through debt and equity in 2026, while planning roughly $750 billion in AI data center spending by year-end.
- According to the Financial Times, the Magnificent Seven lost over $2.2 trillion in market value in June 2026.
- According to Business Insider, hyperscaler AI spending could reach $725 billion this year, while the Philadelphia Semiconductor Index is up 88%.
- According to Yahoo Finance, BofA’s Bubble Risk Indicator put the semiconductor sector at 0.91, flashing near-bubble risk. That does not mean a crash is guaranteed, but it shows how stretched the AI trade has become.
Sources: Reuters, Financial Times, Axios, Yahoo Finance, and Business Insider.
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