😨 He's Shorting The Whole Thing

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Michael Burry just shorted more Micron. It's up 222% this year.

He sold short at $933.86 a share. On purpose.

The Big Short guy dropped his latest moves on Substack Friday, and the theme is loud: he thinks the semiconductor trade has completely lost the plot.

He added to bearish positions across the AI complex:

That last one is the tell. Burry says the SOXX short plus his puts adds up to a large position.

The Tesla $TSLA ( ▼ 1.22% ) and Palantir $PLTR ( ▲ 7.01% ) shorts are still open too. On Tesla, he says he hasn't covered because the position "gets smaller all on its own."

Which is a very polite way of saying the stock is doing his job for him.

Burry increased his exposure to Flutter $FLUT ( ▲ 4.53% ) and DraftKings $DKNG ( ▲ 4.78% ).

Yes. The gambling stocks.

DraftKings is down 33% this year. Tesla is down 30%. Palantir is down 31%.

So the man who called the housing crash is short the stuff going vertical and long the stuff getting hammered.

Classic Burry. Buy the wreckage, sell the party.

Every Burry disclosure comes with the same warning label: he was right about 2008, and he's also been early or flat wrong plenty of times since.

Being contrarian is not the same as being correct. It's just louder.

But the shape of the trade is worth noticing. He's not picking one bad chip company. He's shorting the ETF, which is a bet that the whole sector is priced for a future that hasn't shown up yet.

If you own semis, you're already living Burry's thesis in reverse. A 222% year means expectations are now doing most of the heavy lifting, and expectations are fragile things.

Worth asking: how much of your portfolio became one trade? A lot of "diversified" tech holdings are the same AI bet wearing different tickers.

And on the flip side, the beaten-down names Burry is adding to are cheap for reasons, not by accident. Down 33% is a discount or a warning depending on why.

One guy's Substack is not a strategy. But it is a decent prompt to check what you actually own.

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Another guy from The Big Short’s been scaring everyone.

Steve Eisman went on CNBC and said: the market has become a single trade.

Everything is the AI trade now. Even the stuff that looks unrelated.

Investment banks posting great numbers? A lot of that is AI financing. Same reservoir, different pipe.

His read on the mood: much more complicated now, not all negative, just complicated. From a professional bear, that counts as optimism.

Eisman isn’t convinced the large language model companies have any moats at all.

Chinese AI models cost roughly five times less than Western ones like OpenAI and Anthropic, largely because they run open source.

Cheaper product, similar job, minimal switching cost. That's the setup for a price war, and price wars are unkind to businesses burning cash by the billion.

His verdict on how it resolves: he doesn't know, and he doesn't think anybody else does either.

Refreshing honesty in a market where everyone claims to have modelled 2030.

Someone asked Eisman what happens if a hyperscaler cuts AI capex instead of raising it.

"I think the market would go straight down."

Why? Because that spending is somebody else's revenue. Mostly Nvidia's. Nvidia just posted 85% revenue growth, and it did that because the hyperscalers keep writing cheques.

Cut the cheques, cut the growth, cut the story propping up the index.

Eisman even allowed that a slowdown might be healthy long term. "Long term" is doing some heavy lifting in that sentence.

Concentration risk is knocking on the door.

If you hold an S&P 500 tracker plus a few tech names, you may own the same bet four times over without realising it.

Capex guidance is now the number that matters. It's what knocked Alphabet, and it's what feeds Nvidia.

And the question nobody has answered yet: if Chinese models are five times cheaper, what exactly are the Western labs charging for?

China plans to build five chipmaking machines this year. ASML $ASML ( ▼ 5.8% ) dropped 5% on the news.

Five. Not five thousand. Five.

A Shanghai company nobody can name, backed by Beijing, has started mass producing deep ultraviolet lithography machines, according to The Information, citing two people familiar with it.

Five this year. Up to 20 next year.

That's the entire threat. And it was enough to knock a chunk off the most important equipment maker on the planet.

DUV is the workhorse tool. It handles the less critical layers on advanced chips, plus the older chips that run your car, your fridge, and roughly everything that isn't a frontier AI accelerator.

The really hard stuff needs EUV, the pricier machines using smaller wavelengths that print the most advanced semiconductors.

China is chasing those too. They're still prototypes, and likely years from production.

So Beijing has built the reliable family estate car while ASML sells the only Formula 1 engine in existence. Still, the estate car works.

ASML fell 5% in early Monday trading. The pain spread down the supply chain:

Here's the number that actually matters. China made up 14% of ASML's net systems sales in Q2, down from 19% in Q1.

That drop happened before anyone even knew about the Shanghai machines.

CFO R.J.M. Dassen told investors on the earnings call he still expects China to land around 20% of total net sales for the full year, driven mostly by mainstream logic demand.

One of those two things is going to be wrong.

Beijing put lithography on the priority list in 2002. That's 24 years of trying.

The 2022 US export controls changed the method. Beijing stopped running it as a state research project and started pairing the state with private companies.

Turns out telling an economy the size of China's that it can't buy something is a fairly motivating sales pitch.

What it means for you: ASML's moat was never about being better. It was about being the only one. Every machine that rolls out of Shanghai chips away at the "only one" part, even if the machines are slower, older, and rarer.

The market is repricing certainty, not revenue. Five machines take nothing off ASML's order book this year. But the story where ASML prints money forever with no competitor now has an asterisk.

Watch the China revenue percentage next quarter. If 14% keeps falling while management insists on 20%, the market will trust the number over the guidance.

Does 24 years of catching up finally count for something? Ask again in 2028.