Michael Burry is all-in on these stocks that have ‘corrected tremendously’ — while doubling down on his AI shorts as Nasdaq hits high

Eric EspositoSat, September 26, 2026 at 12:00 PM UTC

0

The NASDAQ-100 hitting fresh all-time highs isn’t fazing one of AI’s biggest bears.

In a recent Substack post, “Big Short” investor Michael Burry characterized the current state of the NASDAQ as “historically overvalued, and historically top heavy,” which gives him increasing confidence to ramp up his short positions against a few major AI stocks.​

Must Read -

Jeff Bezos backs a platform that lets anyone invest in rental homes for as little as $100 — 6 ways to build wealth like a landlord without actually being one

Dave Ramsey warns nearly 50% of Americans are making 1 big Social Security mistake. Here’s what it is and 3 simple steps to fix it ASAP

A single line on your car insurance policy could be inflating your premium by up to 30% — here's what to change

In addition to betting against chips with positions against Micron and the iShares Semiconductor ETF (SOXX), Burry increased his shorts on cloud computing company Nebius Group and the enterprise AI software provider Palantir.

A major part of Burry’s bearish thesis is that there will soon be “a chip glut again” as the semiconductor industry falls back into its traditional boom-to-bust cyclicality.

As Burry wrote, “Over the next two years this shortage will blow off as production catches up, and memory will have a down cycle again.”

To support his case, Burry shared an interview with the Taiwanese electronics maker Acer’s CEO Jason Chen. When asked whether he noticed memory shortages, Chen responded, “No way,” adding, “How could there be a continuous shortage? China’s production capacity has been consistently increasing, and there is absolutely no shortage issue. Contract prices are currently fluctuating at a high level, with some prices going up and others down, causing a bit of confusion.”

Burry looks in the bargain bin

Although Burry gets a lot of press for his bearish views, he’s not betting against the market entirely. In fact, Burry has been buying beaten-down companies outside the AI sector hand over fist.​

In Burry’s Substack, he highlighted five stocks he’s now bought as “full positions” in his portfolio: The roofing distributor QXO, the grocery store Sprouts Farmers Market, the custom stuffed animal store Build-A-Bear, the footwear brand Birkenstock and the eCommerce site Mercado-Libre.

While these stocks are in very different industries, they share one trait Burry really likes: they’re trading at deep discounts. Burry wrote that he believes all of these stocks “have corrected tremendously” and now offer extremely “attractive” share prices.

Year-to-date, all the stocks Burry is buying have fallen double digits, with some like Build-a-Bear down as much as 57%.

Advertisement

Read More: Vanguard reveals what's coming for U.S. stocks — and it could be bad news for this group of investors

Burry isn’t the only AI skeptic​

Looking at recent charts of AI-related stocks like Micron or SanDisk, it’s clear Burry is in the contrarian camp.

However, there are other prominent investors who don’t think this party will last much longer.

For instance, Business Insider reported that GMO’s co-founder Jeremy Grantham said the current valuations for AI stocks are “obviously a bubble” and that “the market will become a whole lot cheaper” once the enthusiasm bursts.

DoubleLine Capital’s founder Jeffrey Gundlach echoed this sentiment more recently in an interview on the Julia La Roche Podcast. As the so-called “bond king” warned, “You’re going to have fallout and losers in the AI race to the holy grail. It’s going to happen. And that’s what’s going to be what leads to the next very significant drawdown in the risk assets.”

Although Gundlach said he doesn’t know when the fall will come, he says it’s close enough that he wants to be completely “out” of AI equities. Instead, Gundlach recommended an equal-weighted ETF tracking Fortune 500 companies to avoid overconcentration in AI, along with exposure to assets like high-quality bonds, emerging market debt, gold and a commercial real estate ETF.

On the “chip glut” theme, the analyst Sujai Shivakumar from the Center for Strategic and International Studies shared Burry’s opinion that “Chinese overcapacity” in the chip sector could become a major risk for companies like Micron. As Shivakumar wrote, “Expanding Chinese DRAM and NAND production may ease some near-term pressure, but it could also produce future surplus, dumping, trade friction, and deeper dependence on Chinese suppliers for commoditized but strategically important memory devices.​

Although these bearish predictions have yet to become a market reality, things could change quickly as Micron gears up for its quarterly earnings at the end of September. Data published on Investor’s Business Daily shows Wall Street’s expectations are extremely high, including 940% year-over-year earnings growth. For good or ill, Micron’s earnings guidance will likely set the tone for the AI narrative.

What To Read Next -

The tax breaks in Trump's 'big beautiful bill' expire after 2028. Here are 4 moves to make before the window closes

Millionaires under 43 hold only 32% of their wealth in stocks. Here’s where their money is actually going

Your Social Security ‘Trump Bump’ in 2027 will be one of the biggest in 25 years — but there’s a serious catch no one’s talking about

This 20-year old lotto winner refused $1M in cash and chose $1,000/week for life. Now she’s getting slammed for it. Which option would you pick?

Get Warren Buffett's best investing lessons, free. Join 250,000 readers getting Moneywise’s sharpest money reporting every week. Subscribe and we’ll send you our guide to the ideas that built Buffett's fortune as a welcome gift.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

Original Article on Source

Source: “AOL Money”