"Big Short" Investor Michael Burry Is Now Betting Against Micron, Nvidia, and Tesla. Should You Be Worried?

Michael Burry spent this week putting entry prices on a bet against the artificial intelligence (AI) trade. In a June 30 post on his Substack, the hedge fund manager made famous by "The Big Short" disclosed short positions in Nvidia (NASDAQ: NVDA), Tesla (NASDAQ: TSLA), Applied Materials (NASDAQ: AMAT), Caterpillar (NYSE: CAT), and the iShares Semiconductor ETF (NASDAQ: SOXX). Two days later, he added a short against Micron Technology (NASDAQ: MU), reportedly entered near $1,052 per share.

Burry is the investor who bet against the housing market ahead of the 2008 crash. When he targets three of the market's most widely held stocks at once, the question practically asks itself: Should you be worried?

The answer starts with taking his argument seriously.

Image source: Getty Images.

The case Burry is making

Burry's argument isn't that these businesses are failing. It's that their stock prices have stretched to historical extremes. Micron, he reportedly noted, now trades further above its 200-day moving average than at any point since 1984 -- a stretch that includes the dot-com peak.

History does much of the work in his thesis. Micron has been public for four decades, and by Burry's reported count, its stock has suffered 34 drawdowns of more than 30% along the way. In his view, the AI boom hasn't repealed the memory cycle. It has simply made investors forget the cycle exists.

The rest of the short book extends the same logic across the AI supply chain: Applied Materials sells the equipment used to make advanced chips, Caterpillar supplies machinery and power systems for the data center build-out, and the semiconductor ETF wraps the whole group into a single ticker.

Of course, a famous name and an alarming chart don't make a thesis correct. Investors have been calling the AI trade a bubble for more than two years while these stocks kept climbing. The more useful question is how much each of the three stocks depends on the optimism Burry is attacking.

Three stocks, three different bets

Micron is where his case is most interesting, because the stock doesn't look expensive on today's numbers. In its fiscal third quarter (the period ended May 28, 2026), the memory maker's revenue more than quadrupled year over year to $41.5 billion, and it rose about 74% from the prior quarter. Management guided for roughly $50 billion in revenue in fiscal Q4.

At about $976 per share as of this writing, Micron trades at roughly 22 times earnings. That looks modest. But memory peaks usually do -- the multiple compresses as earnings spike, and the argument is never about the multiple. It's about whether earnings this high can last. Burry is betting they can't. Micron's counterargument is that its new multi-year customer agreements make demand more durable and predictable than in past cycles.

Nvidia may be the strangest name on the list, because its valuation is arguably the easiest to defend. Revenue in the chipmaker's fiscal first quarter (ended April 26, 2026) rose 85% year over year to $81.6 billion, with data center revenue climbing 92%. Yet the stock trades at about 30 times earnings. If the AI trade is a bubble, its largest member is priced like something much tamer.

Tesla, meanwhile, is the opposite case. The electric-car maker delivered 480,126 vehicles in the second quarter, up about 25% year over year -- and the stock still fell about 7.5% the day of the report. But the market's focus has moved past volume to what each vehicle earns. Tesla's first-quarter operating margin was just 4.2%, and with earnings per share of $1.10 over the past 12 months, the stock trades at more than 350 times earnings. Burry doesn't need a cycle argument here. He just needs Tesla's robotaxi and software profits to arrive later than the valuation assumes.

So, should you be worried?

Not about the disclosure itself. A short-seller announcing his positions changes nothing about these businesses. And Burry has been early on big calls before. Even his famous housing bet took years to pay off.

But his stress test lands harder on some of these stocks than others. Nvidia's numbers do the most to answer him, since 85% growth at 30 times earnings leaves a cushion the other two don't have.

The other stocks are arguably harder to defend. Micron asks investors to believe memory pricing can hold at levels the industry has historically struggled to sustain through a full cycle. And Tesla asks them to pay more than 350 times earnings, while the profitable version of the company remains mostly ahead of it.

Overall, I wouldn't sell a stock just because Michael Burry is betting against it. But his shorts are a useful prompt for an honest look at position sizes. If a memory downturn or a slipped robotaxi timeline would do serious damage to a portfolio, that risk is worth considering and potentially even addressing while the argument is still unsettled, not after it's over (and potentially too late).

Daniel Sparks has clients with positions in Tesla. The Motley Fool has positions in and recommends Applied Materials, Caterpillar, Micron Technology, Nvidia, Tesla, and iShares Trust-iShares Semiconductor ETF. The Motley Fool has a disclosure policy.