Burry Shorts AI Chip ETF, Gains 21% in One Month
N.R. Finch
'Big Short' investor Michael Burry shorted the semiconductor ETF SOXX at around $643 in late June; one month later it closed at $505, down 21% — and he is still adding to the position, with options expiring in March 2027.
What exactly did Burry bet against?
His target was the iShares Semiconductor ETF (SOXX), which tracks the NYSE Semiconductor Index — holdings include Nvidia, AMD, Micron, and Intel.
He disclosed the short on Substack on June 30 at roughly $643; by July 31 SOXX closed at $505, a 21% drop in one month.
This means → he was not betting against a single company but calling the entire AI chip sector overvalued.
What was his case for going short?
Two core arguments: the Philadelphia Semiconductor Index's deviation from its 200-day moving average — the average closing price over the past 200 trading days — was the widest since 2000; and the price-to-sales ratio topped 16×, which he called "extremely high."
Burry labeled SOXX "pure overvaluation in index form." In plain terms = he argued the problem was not one expensive stock but an entire sector priced beyond fundamentals.
He also raised a deeper concern: spending by hyperscalers such as Meta and Alphabet on chips and data centers could become obsolete within years, and Nvidia has reciprocal contract arrangements with AI giants like OpenAI that amount to mutual "cheerleading."
What did he do over the month?
June 30: disclosed the SOXX short at ~$643; rolled put options out to March 2027 with strikes in the low-to-mid $400s.
July 24: added to the short near $536, calling the combined position plus options a "big position."
July 30: added again near $506, saying the chip long trade had lost momentum and was starting to "look tired."
This means → he did not take profits on the drop — he added on the way down. His target is the $400 range, still roughly 20% below the current price.
How did the market react?
Larry McDonald, former head of U.S. macro strategy at Société Générale and author of *The Bear Traps Report*, publicly praised Burry's call on social media.
McDonald noted that another major chip index, the VanEck Semiconductor ETF (SMH), posted its worst July in nearly 30 years.
This reflects a sector-wide drawdown, not a single-stock event — the selloff hit semiconductor indices as a class.
Is this bet over?
No. Burry's put options expire in March 2027, which means → he has given himself nearly two years for his thesis to play out.
He also disclosed short positions in Nvidia, Micron, and the Nasdaq-100 index, but without dollar amounts his overall July P&L cannot be confirmed.
In plain terms = the 21% decline is only the first leg. If SOXX ultimately falls to the $400 range, the return from his entry price would exceed 37%. Whether the semiconductor sector stabilizes before then is the key test of this bet.
Content is for reference only, not financial advice.