Suddenly, double the short! Wall Street's "Big Short" takes action again! AI "crying wolf", is it true this time?
The “Big Short” went short on a large scale. Michael Burry, the investor famous for being the prototype of the movie "The Big Short," once again increased his short positions on Nvidia, Micron Technology, and the Philadelphia Semiconductor Index ETF, and maintained short positions on Tesla and Palantir and held put options on the Nasdaq 100 Index ETF. Looking back, Michael Burry said in early July that he shorted Micron Technology's stock at a price of $1,051.87 per share. He warned at the time that the U.S. semiconductor sector might face a correction of about 30%. At the market level, U.S. semiconductor, storage, and optical communications concept stocks suffered a violent sell-off last Friday (July 24). The Philadelphia Semiconductor Index fell by more than 4%, SanDisk fell by more than 10%, and SK Hynix ADR fell by more than 8%. International credit rating giant Moody's warned in its latest report that the race to build AI infrastructure, which costs nearly a trillion dollars each year, is eroding the free cash flow of "hyper-scale cloud service providers." The ‘Big Short’ doubles down on short bets According to the latest article published by Michael Burry, the "big short" on Wall Street, he is "doubling down" on his short position in the AI chip sector - this is not only an increase in the size of the position, but also a further escalation of his bearish determination. After shorting Micron Technology for the first time in early July, he recently further increased the size of his short positions in Nvidia and the Philadelphia Semiconductor Index ETF, and at the same time expanded the scope of his short selling to Caterpillar. His semiconductor short positions have been combined to form a "large position" in his investment portfolio. Specifically, Michael Burry further shorted Micron Technology at a price of $933.86 per share, increased his short position in NVIDIA at a price of $210.28 per share, and added a short position in the Philadelphia Semiconductor ETF at a price of $535.83. Regarding Nvidia's short-selling logic, Michael Burry said that the current large demand for Nvidia is not driven by real end customers. The financing arrangements for related needs are outside the balance sheet and have not been disclosed. Future revenue is "mostly financed through revolving arrangements." He cited the 2026 Bank for International Settlements annual report as support. Michael Burry’s bearish view on AI-related sectors is based on doubts about the authenticity of industry demand. He believes that in the current AI infrastructure investment boom, a large amount of capital expenditures do not correspond to real terminal needs, but self-circulate through opaque financing structures, and there is a risk of systematic overestimation. Michael Burry predicts that the U.S. semiconductor sector may face a correction of about 30%, and regards the capital expenditure expansion plans of Samsung Electronics and SK Hynix as the "beginning of the boom to bust" of the industry's business cycle. In addition, Michael Burry said that Tesla short positions have not yet been closed. He also maintained a short position on Palantir and continued to hold QQQ (Invesco Nasdaq 100 Index ETF) put options, indicating that his bearish stance on the overall technology sector has not relaxed. While shorting AI, Michael Burry shifted his long funds to consumer and medical fields that were less relevant to the technology boom, reflecting his overall judgment on the current market structure. He bought a "significant amount" of Flutter Entertainment at $100.72 per share and DraftKings at $23.07 per share. In addition, he also increased his holdings of Molina Healthcare at a purchase price of $197.02 per share. U.S. semiconductor sector suffers heavy sell-off On July 24, Eastern Time, U.S. chip stocks fell across the board. As of the close, the Philadelphia Semiconductor Index fell by more than 4%, and all 30 component stocks closed down. Arm fell by more than 8%, Intel fell by more than 7%, Micron Technology fell by more than 6%, Applied Materials and Lam Group fell by more than 4%, ON Semiconductor and AMD fell by more than 3%, and TSMC ADR and ASML fell by more than 2%. Storage concept stocks collectively fell sharply, with Roundhill Storage ETF falling by more than 8%, SanDisk falling by more than 10%, SK Hynix ADR falling by more than 8%, and Micron Technology, Western Digital, and Seagate Technology falling by more than 6%. Moody's warned that the race to build AI infrastructure, which costs nearly US$1 trillion each year, is eroding the free cash flow of "hyperscale cloud service providers" and increasing their balance sheet risks.
Moody's pointed out in a research report released last week that the AI investment boom is forcing the world's most cash-rich companies such as Google and Microsoft to rely heavily on debt financing, stock financing and off-balance sheet financing to support their ambitious AI expansion plans. The report reads, "In the past, these companies mainly relied on light-asset models with software, intellectual property and scalable cloud services as the core, requiring relatively limited capital investment. Today, the transformation from light-asset to heavy-asset models requires unprecedented investment scale and financing needs." According to Moody's data, the current direct debt scale of the six hyperscale cloud service providers (Microsoft, Amazon, Google, Meta, Oracle and CoreWeave) has reached approximately US$460 billion.
Moody's pointed out in a research report released last week that the AI investment boom is forcing the world's most cash-rich companies such as Google and Microsoft to rely heavily on debt financing, stock financing and off-balance sheet financing to support their ambitious AI expansion plans. The report reads, "In the past, these companies mainly relied on light-asset models with software, intellectual property and scalable cloud services as the core, requiring relatively limited capital investment. Today, the transformation from light-asset to heavy-asset models requires unprecedented investment scale and financing needs." According to Moody's data, the current direct debt scale of the six hyperscale cloud service providers (Microsoft, Amazon, Google, Meta, Oracle and CoreWeave) has reached approximately US$460 billion.