Michael Burry, the famous “Big Short” investor, has initiated a new short position against semiconductor giant Micron Technology Inc. (NASDAQ:MU), declaring the artificial intelligence darling a structural “destroyer of capital” caught in a highly psychological market bubble.
Chasing ‘Bubble Peaks’
Burry disclosed the thesis on his private Substack, expanding his broader bearish campaign against overextended AI infrastructure equities.
Despite Micron’s massive gains over the past year, driven by aggressive artificial intelligence demand, Burry revealed he shorted the stock “even though it was down a good amount,” as of Thursday, firmly betting that the current semiconductor frenzy is unsustainably overheated.
He highlighted that the stock’s extension over its 200-day moving average has “never been as extended as in 2026, not even during the dot-com peak,” framing the chip rally as a late-stage phenomenon typically seen near “bubble peaks.”
This followed President Donald Trump, who on Wednesday praised MU for its $250 million commitment to the Trump Accounts program, while CEO Sanjay Mehrotra said the initiative complements the company’s more than $200 billion investment in U.S. memory manufacturing and research and development.
Incinerating Corporate Capital
The core of Burry’s thesis rests on Micron’s underlying forty-year financials, which he argues are being dangerously ignored by retail traders and institutional bulls.
Over the last 42 years, the company has logged a median return on invested capital (ROIC) of just 4% and a median return on equity (ROE) of 7%, figures he labeled “frankly terrible” against a double-digit cost of capital.
“One quarter in every three, Micron is a destroyer of capital,” Burry stated, highlighting that free cash flow runs negative 48% of the time. He dismissed Wall Street’s focus on EBITDA margins as “ridiculous for a business that is this dedicated to incinerating cash on big machines.”
The Scarcity Bias Trap
Burry concluded that bulls are falling victim to a “smorgasbord” of psychological traps, particularly “scarcity bias” regarding corporate claims that High Bandwidth Memory (HBM) is “sold out through 2026.”
While the market currently deems the hardware uniquely “precious,” Burry maintains it is simply a cyclical commodity tracking toward a familiar, brutal correction.
How Has MU Performed in 2026?
MU shares have advanced by 241.81% year-to-date, down 8.32% over the last month, and 701.35% higher over the year. The stock closed 5.49% lower at $975.56 apiece on Thursday, and it was up 0.15% in after-hours trading.
Benzinga’s Edge Stock Rankings indicate that MU maintains a strong price trend in the long, short, and medium terms, with a good growth score.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Image via Shutterstock
Recent Comments