Michael Burry's SOXX Short Looks on Track After Chip ETF's Worst Month Since 2008

How Michael Burry's SOXX Short Played Out in July

Michael Burry, the investor best known for betting against subprime mortgages before the 2008 crisis, appears to have timed another high-profile short. In a June 30 post on his Substack, Burry said he had shorted the iShares Semiconductor ETF (SOXX) at roughly $643 a share and refreshed his bearish put options on the fund. The ETF, which tracks the NYSE Semiconductor Index and counts Nvidia, AMD, Micron and Intel among its holdings, fell 21% in July and closed at $505 on July 31.

The decline marked the chip index's worst monthly performance since 2008. Larry McDonald, author of The Bear Traps Report and a former head of US macro strategy at Societe Generale, praised the trade on X, noting that the rival VanEck Semiconductor ETF (SMH) recorded what he called its worst July in 30 years and a 30-day decline of 17.59%.

Burry laid out his reasoning in the June 30 post: the Philadelphia Semiconductor Index was the most overextended relative to its 200-day moving average since 2000, and its price-to-sales ratio was above 16, which he called 'very high.' He described SOXX as a 'pure form of overvaluation in an index.' He subsequently disclosed adding to the short at about $536 on July 24 and again at about $506 on July 30, writing that the bullish chip trade had lost momentum and started to 'look tired.'

Burry also rolled his put options to March 2027 expirations with strike prices in the low-to-mid $400s, signaling he expects the index to fall to those levels. Alongside SOXX, he has disclosed bearish bets on Nvidia, Micron and the Nasdaq 100. He has not disclosed the dollar size of his positions, so his exact profit from the July decline remains unclear, and he did not respond to Business Insider's questions before publication.

Valuation Signals, AI Capex and the Chip Selloff

Why Burry Bet Against SOXX: A Valuation Argument, Not a Prediction

Burry's case rests on valuation extremes rather than a near-term earnings forecast. A price-to-sales ratio above 16 and an index trading at its widest premium to its 200-day moving average since 2000 are the kind of readings that historically precede sharp corrections. The July price action, a 21% drawdown in SOXX, supports that view, though the article does not identify a single trigger for the selloff. The trade is not yet complete: the index remains above the levels implied by Burry's own options.

The Options Signal: Burry Expects SOXX in the Low-to-Mid $400s

Burry's March 2027 puts with strikes in the low-to-mid $400s imply he sees additional downside of roughly 11-20% from the July 31 close of $505. By adding to the short at $536 and $506, he averaged into the position as it moved in his favor, which increases his exposure to a rebound. The long-dated puts give him time, suggesting a multi-quarter thesis rather than a quick momentum trade.

AI Spending Is the Real Battleground

Burry's broader argument is that hyperscalers such as Meta and Alphabet are overspending on microchips and data centers that could become outdated within a few years. He has also criticized arrangements between Nvidia and OpenAI as 'give-and-take' contracts that keep the AI narrative fueled. If he is right, July's SOXX decline may be the start of a wider repricing of AI infrastructure spending. If he is wrong, the pullback becomes an entry point for buyers who believe chip demand will outpace supply.

Who Gains and Who Loses From the Chip Rout

The clearest beneficiary is Burry himself, though his profit is undisclosed. Holders of SOXX and other semiconductor ETFs absorbed the 21% decline. Nvidia, AMD, Micron and Intel, the index's named components, face a valuation reset even if their underlying businesses are unchanged. For Meta and Alphabet, Burry's critique adds pressure to justify rising capital spending to investors.

Reference Levels to Watch in the Chip Trade

For investors following the semiconductor trade, Burry's public disclosures offer specific reference points.

• Track SOXX against Burry's stated levels: he added to the short at roughly $536 and $506, and his March 2027 puts target the low-to-mid $400s. A move toward the $400s would validate the bear case; a sustained break above $536 would put it under pressure.
• Watch the two valuation signals Burry cited: the Philadelphia Semiconductor Index's premium to its 200-day moving average and its price-to-sales ratio above 16. Both need to compress before the overvaluation argument loses force.
• Follow Meta and Alphabet capex disclosures. Burry's thesis depends on hyperscalers eventually showing signs of overbuilding chips and data centers; guidance cuts would support his side, while renewed increases would challenge it.
• Remember this is a broader AI-complex wager, not just one ETF position: Burry has also disclosed shorts in Nvidia, Micron and the Nasdaq 100.