"Big bear" Michael Burry has increased his bearish bets on the Nasdaq 100 index and the semiconductor sector, citing concerns about NVIDIA's influence in the AI infrastructure market after Jensen Huang stepped down from NVIDIA CEO.
On Thursday, Berry wrote in his Substack column that he took advantage of the rebound of the Nasdaq 100 index from 27,000 points to increase his position in Nasdaq 100 put options, with an exercise price at the beginning of 2027 and an intrinsic value of about 20%. He also repurchased the 25% put position in VanEck Semiconductor ETF ( SMH ) that he had previously reduced, and these options will expire in June.
Burry stated that AI infrastructure and semiconductor companies that are deeply integrated into the NVIDIA supply chain—including Nebius, TSMC, ASML, and CoreWeave—have previously greatly benefited from NVIDIA's market position and business dividends. However, the current situation seems to have entered a new phase. He is paying attention to signals of a "significant decline in NVIDIA's influence"; at the same time, he believes that Broadcom and AMD are likely to be beneficiaries of this changing landscape.
The heavyweight stocks of SMH include NVIDIA. Berry believes that the valuation of this ETF "still has significant room for decline" and predicts that the earnings of its constituent stocks will decline over the next two years. He also mentioned that, compared to iShares semiconductors ETF, he prefers to go short on SMH because the top two heavyweight holdings of SOXX are AMD and Broadcom.
“SOXX can be considered a decent alternative, but it’s not the best option. I will continue to stick with SMH.” Berry wrote.
Burry also pointed out that after the mid-term elections, with Democrats taking control of Congress, large cloud providers may gain stronger bargaining power. At the same time, the cycle for data center projects to be postponed will lengthen, and such companies are expected to benefit from this. He mentioned that within the NASDAQ 100 index, the stocks of some cloud providers rose, offsetting the drag caused by NVIDIA's weakening performance.
In addition, Berry reiterated his consistent view: from the perspective of existing shareholders, the profits calculated using traditional accounting methods overestimate the actual profitability of technology companies. "We cannot ignore the fact that, even putting aside this scandal, the profits of technology companies are not as impressive as they appear in the financial reports."
