Renowned investor Michael Burry has taken a short position against Micron Technology (MU), arguing that the memory chipmaker’s stock has reached historically extreme levels and faces significant downside despite the ongoing AI-driven rally.
The move comes shortly after Micron announced a $250 million commitment to Trump Accounts, a government-backed savings initiative for American children. As part of the programme, the company will match employee contributions up to $1,000 per child under 18 and make one-time $250 deposits into accounts for children living in counties where Micron operates, including parts of Idaho, New York, Virginia, California, Colorado, Minnesota and Texas.
According to a Stocktwits report citing Burry’s Substack post, the investor believes Micron’s recent share price surge has been driven more by AI enthusiasm and fear of missing out (FOMO) than by the company’s underlying fundamentals.
Burry questions Micron’s fundamentals
Burry described Micron as a textbook cyclical stock, noting that it has experienced 34 declines of more than 30% over the past 42 years. He argued that the stock is now trading further above its 200-day moving average than at any time since 1984, including during the dot-com boom.
He also criticised the company’s long-term profitability, citing a median return on invested capital of 4% and a median return on equity of 7%, figures he described as “frankly terrible.” According to Burry, Micron has generated negative free cash flow in nearly half of its reporting quarters, with one in every three quarters effectively destroying shareholder capital.
Micron shares fell 5.5% during last week’s regular trading session before recovering modestly in after-hours trading.
AI optimism and market exuberance
Burry said the stock’s valuation reflects excessive optimism surrounding artificial intelligence rather than sustainable business performance. He argued that periods of heightened market enthusiasm have historically been followed by sharp corrections.
His bearish view on Micron is consistent with his broader stance on AI-related semiconductor stocks. In June, Burry disclosed short positions in Nvidia (NVDA), Applied Materials (AMAT) and the iShares Semiconductor ETF (SOXX), predicting the sector could face a correction of around 30%.
At the same time, he increased his long positions in PayPal, Sprouts Farmers Market, Zoetis, Fannie Mae and Freddie Mac, signalling a preference for what he views as undervalued or more defensive investments.
Retail investors remain optimistic
Despite Burry’s warning, retail investor sentiment remains largely positive. According to Stocktwits, discussion around Micron has surged over the past three months, with message volume up 260% and the number of retail watchers rising by 4.1%.
Many investors continue to view Micron as one of the key beneficiaries of the AI boom, even as Burry cautions that the company’s valuation may be setting the stage for another cyclical downturn.
