《The Big Short》’s protagonist Michael Burry has built sizable short positions targeting the semiconductor industry, drawing widespread attention from the market. Burry says that the current gains in semiconductor stocks are mainly driven by technical factors and market sentiment, and may lack long-term fundamental support. He bought iShares Semiconductor ETF (SOXX) with an early-2027 expiration and also bought put options on Nvidia, going against the market to add to software and payments stocks that the market has “blasted to pieces,” such as Microsoft (Microsoft), Adobe, PayPal, and others.
Michael Burry expects the semiconductor index to fall by 30%
The Philadelphia Semiconductor Index has risen for the 18th consecutive trading day, mainly benefiting from expectations of data center expansion and a shortage of chip supply. However, Burry says this rally is “driven more by technical factors,” rather than being supported by fundamentals. He points out that the iShares Semiconductor ETF’s P/E ratio is already at a relatively high level, suggesting a significant technical premium in the stock price. He believes a price uptrend driven by capital flows is difficult to sustain over the long term. As the divergence rate between the stock price and the 200-day moving average widens, market expectations for future earnings may already have been priced in,
Burry bought put options on the Semiconductor ETF (SOXX), with a strike price of $330 and an expiration of January 2027. At the same time, he also bought put options on (Nvidia) (Nvidia) with the same-day expiration.
SOXX is currently trading at $461. Burry’s move indicates that he believes SOXX will fall to below $330 by next January, with a decline as large as 28%.
(Nvidia(NVDA) shares hit a new high; its $5 billion investment in Intel has already delivered a 155%) return
Buying software stocks as a bet against fund rotations in the capital-allocated sector and for hedging
Burry is not bearish on technology across the board. While he is shorting semiconductors, he has also added against the market to software and payments stocks that have been “blasted to pieces” by the market, such as Microsoft (Microsoft), Adobe, PayPal, and others.
Burry’s bearish position does not deny the long-term development of semiconductors; it points out the gap between how the capital market prices assets and how the real economy operates.
And this kind of maneuver—cutting positions on high-valued hardware while positioning in low-valued software—reflects the hedging strategies of professional institutions. By buying long-dated put options, Burry not only hedged the risk of macroeconomic volatility, but also provided downside protection and a hedging mechanism for his investment portfolio during future corrections.
This article, “The Big Short,” Burry is bearish on semiconductors and expects them to drop 30%, so he switches to buying beaten-down software stocks, was first published on Lianxin News ABMedia.
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