Investor Michael Burry, famed for his prescient bet against the U.S. housing market, has taken a bearish stance on Micron Technology (MU), arguing that the memory chip maker's recent surge is fueled by speculative fervor rather than solid fundamentals. According to a post on his Substack, Burry shorted Micron shares at $1,051.87 on July 1, while simultaneously increasing his stakes in five existing long positions.
Burry Questions Micron's Valuation and Cyclical Nature
In his Substack post, Burry attributed the short to what he described as “fear of missing out, greater fool theory, [and] public commitment bias.” He emphasized Micron's notorious volatility, noting that the company has experienced 34 drawdowns of more than 30% over the past 42 years. Burry also pointed out that Micron's shares are trading further above their 200-day moving average than at any time since 1984, surpassing even the dot-com peak.
Burry criticized the company's historical profitability, stating that its median return on invested capital of 4% and median return on equity of 7% are “frankly terrible.” He added that “one quarter in every three, Micron is a destroyer of capital,” citing decades of uneven returns and periods of negative free cash flow. While options could have been used to express a bearish view, Burry noted that “the puts seemed expensive,” and he plans to add puts if the stock stabilizes and volatility declines.
Broader Bearish View on Semiconductor Sector
The Micron short is part of Burry's wider negative outlook on AI-related semiconductor stocks. Earlier this week, he disclosed short positions in Nvidia, Applied Materials, and the iShares Semiconductor ETF (SOXX), warning that AI chip stocks could face a 30% correction. In a separate June 30 post, Burry expressed concern over plans by Samsung Electronics and SK Hynix to invest more than $500 billion in a new semiconductor hub, calling it “the beginning of the end.”
Market sentiment toward memory stocks has weakened broadly. Micron shares fell 5% on Thursday after dropping nearly 11% on Wednesday, alongside sharp losses in SanDisk. Some analysts linked the decline to reports that Meta is considering selling excess cloud capacity, while Apple is reportedly seeking additional memory supply from China. Swissquote senior analyst Ipek Ozkardeskaya commented, “China makes up around 15% of Apple’s sales and other companies could follow these steps as they also see their profits being squeezed by an unreasonable jump in memory chip prices.”
Burry Adds to Long Positions
While increasing his bearish exposure to semiconductors, Burry also disclosed that he added to several existing investments, including PayPal, Sprouts Farmers Market, Zoetis, Fannie Mae, and Freddie Mac. Summarizing his latest positioning, Burry wrote: “Yesterday I shorted one stock even though it was down a good amount because I think I have a pretty good idea how this resolves. I also added to five positions. This time may be different, but not nearly different enough.”
For context, the broader market has seen significant volatility in chip stocks. As reported in Nasdaq Futures Dip as Chip Stocks Retreat; Micron Profit-Taking, AI Doubts Weigh, profit-taking and AI doubts have weighed on the sector. Additionally, AI and Chip Rout Sinks Nasdaq 2.2%; Dow Loses 320 Points as Micron Plunges 12% highlights the recent downturn. Investors may also want to consider Wells Fargo, Goldman Sachs, Vanguard: Three ETFs to Capture July's Rally Potential for alternative exposure.
This article is for informational purposes only and does not constitute financial advice.
