To The Moon

$Direxion Daily Semiconductors Bull 3x Shares(SOXL)$  $iShares Semiconductor ETF(SOXX)$  

Are people really afraid of Michael Burry which led to the panic sell-off? 

or Was it $Meta Platforms, Inc.(META)$  who announced they'll be selling their excess compute capacity?

or both?

My take - it is both. Neither should warrant for an extreme fear or sell-off. 

Someone will say, what do I know? I am not a Pro Trader. I agree.

However, what I see is that MB is just creating this fear so he can buy more, his justification - at the right valuation. In my view, he is using his influence so that he can buy at lower price just because he missed before.

Let's actually look at what he's short. As of end of June, Burry disclosed shorts on Nvidia, AMD, Tesla, Caterpillar, Applied Materials, and the SOXX ETF itself, then added Micron on July 1st at $1,051.87/share. His argument isn't that these businesses are bad — it's cyclicality and stretched multiples. Fair point on Micron specifically: 34 drawdowns of 30%+ in 42 years is a real pattern. But he's applying a "Micron defines cyclical" thesis to Nvidia too, and Nvidia's forward multiple (~30x) doesn't scream bubble the way Micron's chart does. The Philly Semi Index dropped 6.3% on July 1 and another 5.5% on July 2 — an 11% two-day move on a guy's Substack post and some puts. That's the FOMO-in-reverse he's betting on.

as for meta, they got on to the bandwagon of AI looking at the others. However, if you look closely their business model, they didn't need to build more DCs.

Worth noting — Meta's stock actually popped 6-8% on the news, not dropped. The market read it as "smart, turn $145B of capex into a revenue stream" (à la what xAI/Colossus already did with Anthropic). The semiconductor selloff was a separate, second-order read: if a hyperscaler is admitting to excess compute rather than insatiable demand, maybe the capex arms race that's been feeding chip stocks isn't as bottomless as priced in. That's a legitimate data point for the bears, Meta is effectively the first hyperscaler to say "we overbought."

So yeah, both catalysts are real, but neither is a "the AI trade is over" signal. One's a hedge fund manager talking his book with well-timed theater, the other is a company monetizing a surplus, which is arguably bullish for Meta's long-term ROIC even if it's a short-term worry for chip demand growth. Zoom out before you panic sell.