Momentum Stocks Post Strongest Single-Day Gain Since 2000 as Burry Doubles Down on AI Short Bets
0xBroomberg
On July 30, U.S. momentum stocks posted their strongest single-day gain in nearly 25 years, the SOX surged almost 8%, and Korea's KOSPI hit an all-time record daily gain — yet on that same day, Michael Burry added to his AI short book, exposing a deep split over AI valuations between a forced-liquidation squeeze and a contrarian's hedge.
How extreme were the numbers?
The iShares MSCI Momentum Factor ETF (MTUM) jumped 5.5% in a single session. Per Wolfe Research citing Bloomberg's pure momentum factor, it was the strongest single-day momentum move since December 2000.
The Nasdaq 100 rose 3.4%, the S&P 500 gained 1.7%, and the Dow added 1.2%. The Philadelphia Semiconductor Index (SOX) surged nearly 8% — all posting the largest single-day gains in months.
Asia-Pacific moves were even more dramatic: Korea's KOSPI closed up 18%, an all-time record daily gain; Taiwan's benchmark index rose 8%; Japan's Nikkei 225 gained 4%.
Why did this rally happen — and who lit the fuse?
AI investor Leopold Aschenbrenner's hedge fund, Situational Awareness, suffered major losses this month and was forced to liquidate all public equity positions. This means → a flood of buy-to-cover orders hit AI-related stocks that the fund had been short or heavily long.
Ken Griffin's Citadel bought the positions at a discount, triggering a chain reaction of short covering — shorts forced to buy back shares to close positions.
Wolfe strategist Rob Ginsberg attributed the move to three forces converging: an oversold momentum environment + a high-profile margin call + month-end rebalancing. In plain terms = the market was already stretched to the downside, a forced liquidation lit the fuse, and end-of-month fund rebalancing poured fuel on the fire.
Which stocks got hit the hardest on the upside?
Nebius, Situational Awareness's top holding, surged 27% on the day and added another 10% the following morning.
The fund also held large positions in Micron, CoreWeave, and SanDisk — all of which staged sharp rebounds.
Renaissance Macro's Jeff DeGraaf called the move a "mad scramble for stock" — catalyzed by Microsoft's earnings and supercharged by the "Leopold liquidation." This reflects a classic pattern: when a highly leveraged fund is forced out, its concentrated holdings snap back like a coiled spring.
Why did Burry add to his AI shorts on a day everything was ripping higher?
Burry added four short-side trades on July 30: QQQ puts (January 2027 expiry, strikes in the upper $500 range), Nvidia puts (December 2026 expiry, strikes in the low $100 range), a direct short in Micron near ~$880, and a short in the SOXX semiconductor ETF near ~$506.
He simultaneously added long positions in DraftKings, Flutter, Zoetis, and Lululemon, describing the moves as "chips passing to stronger hands." He stated: "All buys and adds. No sells."
This means → Burry is not shorting the entire market. He is running a precision hedge — short the AI compute chain, long consumer and gaming names — betting that capital will rotate out of AI and into other sectors.
What is Burry's short thesis, exactly?
His core argument has been consistent since fall 2025: "Technical useful life is shorter than accounting useful life." In plain terms = AI hardware becomes obsolete fast, but companies stretch depreciation schedules on their books, inflating reported profits.
In November 2025 he specifically flagged that hyperscalers extending server and networking-equipment depreciation could understate roughly $176 billion in depreciation charges over 2026–2028.
Two additional layers: "Capex growth is running ahead of verifiable AI monetization" — spending is outpacing revenue; and "A real technology revolution can still produce a supply glut" — the technology is genuine, but capacity may overshoot demand.
Can this rally last?
DeGraaf was cautious on durability: "Historically, single-day spikes of this magnitude tend to be features of downtrends, not starting guns for new rallies."
Burry's options structure points the same way: low strikes + long-dated expiries (late 2026 to early 2027). This means → he is not betting on an immediate crash but on a nonlinear repricing of valuations and earnings expectations over the coming months.
This reflects the market's central unresolved question: is this rally a one-day technical squeeze, or the start of a trend reversal? The answer depends on whether AI capital expenditure eventually converts into real revenue.
Content is for reference only, not financial advice.