Michael Burry, the well-known U.S. hedge fund manager recognized for his successful bet against the housing market before the 2008 financial crisis, has increased his bearish positions on artificial intelligence-linked stocks, putting pressure on China’s stock market amidst ongoing state support efforts. His recent moves include short positions against Nvidia, Micron Technology, and an exchange-traded fund tracking the Philadelphia Semiconductor Index.
This shift by Burry comes amid broader concerns about the sustainability of capital spending among major U.S. hyperscalers. Moody’s Investor Service recently highlighted risks related to high levels of investment by companies such as Microsoft and Amazon.com. The ratings agency cautioned that elevated spending on data centers and cloud infrastructure could strain cash flows, potentially challenging current equity valuations tied to artificial intelligence and related technology firms.
Burry expressed skepticism about demand growth in the sector, suggesting that much of it is driven not by genuine end-user consumption but rather through off-balance sheet financing and complex funding arrangements. He referenced the 2026 Bank for International Settlements annual report to support his view that a significant portion of future revenues in the AI space may be artificially maintained through circular financial structures.
The developments test Beijing’s recent efforts to stabilize the Chinese stock market following sharp declines that pushed a key technology index into bear market territory last month. In response, regulators including the China Securities Regulatory Commission pledged intervention measures to curb sell-offs. Additionally, two state-backed investment conglomerates invested over 60 billion yuan (approximately HK$85.5 billion) directly into equities, supported by central bank lending.
Despite these interventions, market sentiment remains cautious. The recent initial public offering (IPO) of ChangXin Memory Technologies (CXMT), which raised $9.8 billion in one of the largest mainland listings, elicited a muted response from the broader market. While the CSI 300 Index rose 1.2 percent on the day of CXMT’s debut, some investors suggested that the chipmaker’s large capital raise may have diverted funds from other AI-related stocks, prompting portfolio adjustments. CXMT’s shares soared over 400 percent on their first day of trading in Shanghai, valuing the company at 3.3 trillion yuan and making it the most valuable stock on mainland exchanges.
Burry also issued a warning that U.S. semiconductor stocks might experience a decline of up to 30 percent, pointing to increased capital expenditure by industry players like Samsung Electronics and SK Hynix as potential indicators that the memory chip sector is entering a down cycle. In contrast, he has boosted his holdings in consumer and pharmaceutical stocks, signaling a shift towards more defensive sectors amid rising uncertainty.
As Beijing continues to promote capital markets to support technological innovation and enhance economic independence, the resilience of Chinese equities will likely hinge on how these external and internal pressures evolve. The balance between state intervention and market forces remains delicate as investors weigh risks in the volatile AI and semiconductor arenas.