A prominent US short seller has announced a new bearish position targeting the semiconductor sector, just as the Philadelphia Semiconductor Index reaches record highs after an extended rally.
Michael Burry, famous for being the real-life investor portrayed in the film "The Big Short," recently published a post on his Substack platform revealing that he has established a new short position by purchasing put options on the iShares Semiconductor ETF (SOXX). These options have an expiration date in January 2027 and a strike price of $330.
This move comes as the Philadelphia Semiconductor Index achieved an unprecedented streak of 18 consecutive trading days of gains. Burry suggests the index is likely to eventually pull back, arguing that the current rally is driven more by technical factors than by solid fundamental support. His cautious stance emerges particularly while market narratives heavily focus on a widespread chip shortage, attributed largely to massive data center expansion.
Burry attributes the historic rally to technical drivers rather than strong fundamentals. His strategy implies he believes these technical factors are unsustainable in the long term, and the semiconductor sector may be approaching a period of correction.
On Friday, Intel issued a strong sales forecast, fueling a significant rally in tech stocks. The Nasdaq 100 Index rose 1.9% to a record high, with chipmakers like AMD and ARM contributing substantially to the gains. Simultaneously, the S&P 500 increased 0.8%, also closing at a record high and marking its fourth consecutive weekly gain—its longest weekly winning streak since 2024.
Intel's earnings report was released amid the Philadelphia Semiconductor Index's record-breaking advance. The chip stock index climbed 4.3% on Friday, extending its winning streak to 18 sessions. Investors anticipate robust industry growth, driven largely by demand related to artificial intelligence.
Since April, Burry has published a series of significant market observations. On one hand, he suggested the current US stock market rally has not yet turned into a catastrophic crash. On the other hand, he pointed to data indicating that over the past decade, Wall Street has systematically overestimated the actual earnings of large technology giants by more than 40%, and retail investors are now paying the price.
At the end of last year, Burry announced he would no longer manage client funds, opting instead to focus on investing his own capital and sharing his strategies on Substack. He has long expressed skepticism about the AI boom, repeatedly warning about overvaluation, questionable accounting practices, excessive investment, and circular trading.
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