Michael Burry, the investor famously known as the role of the film The Big Short, recently stated in a post on his Substack platform that he has established a new short position by purchasing put options on the iShares Semiconductor ETF (SOXX). These options have an expiration date of January 2027 and a strike price of $330. This move comes as the Philadelphia Semiconductor Index is recording an unprecedented streak of 18 consecutive trading days of gains. Burry believes that the index will eventually retreat, and that the current rally is driven more by technical factors than by fundamental support. He holds a cautious outlook, particularly amid the prevailing market narrative of chip shortages in the context of large-scale data center expansion.
Burry attributes the historic consecutive gains of the Philadelphia Semiconductor Index to technical drivers rather than solid fundamental support. His bearish view emerges just as the core market narrative revolves around chip shortages, especially related to the massive expansion of data centers. Burry’s strategy suggests that he believes these technical factors are unlikely to be sustained over the long term, and that the sector may be due for a correction.
The iShares PHLX SOX Semiconductor Sector Index Fund is a major ETF in the semiconductor space, with approximately $30.7 billion in assets under management. According to GuruFocus data, SOXX has a GF Value™ of $279.00, while its current trading price is $461.60, indicating that the ETF is overvalued by 65.4%. This substantial gap implies a lack of adequate margin of safety for potential investors. Additionally, SOXX’s trailing price-to-earnings ratio stands at a relatively high 39.85 times, raising concerns about the sustainability of current price levels. Over the past three months, SOXX has reported no insider buying or selling activities.
Since April, Burry has successively released a series of major market views. On one hand, he stated that the current rally in U.S. stocks is not yet poised to immediately evolve into a devastating crash. On the other hand, he used data to point out that Wall Street has systemically overestimated the true earnings of major tech giants by more than 40% over the past decade, and that ordinary investors are now paying the price. At the end of last year, Burry announced that he no longer manages client funds, instead focusing on investing his own capital and sharing strategies on Substack. He has long been skeptical of the AI boom, repeatedly warning about excessive valuations, questionable accounting, overinvestment, and circular trading. Burry noted last week that the “spike top” pattern, where a sharp vertical rise in the stock market is immediately followed by a steep drop, is extremely rare, and that a more volatile, choppy trend is more likely. On Friday, as the S&P 500 closed at a record high of 7,126 points, he posted that “markets never have spike tops” and added, “Being short is not always right.”
