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Welcome back to the investors channel. Michael Berry has reopened short positions. And we're not talking about just one company. This time he has decided to bet against some of the biggest names in the market. Nvidia, Tesla, Applied Materials and Caterpillar. At first glance they appear to be completely different companies.
One leads in artificial intelligence, another dominates electric vehicles, another manufactures the machinery essential for producing semiconductors, and the last is one of the most important industrial giants on the planet. So, what do they have in common? Because when you analyze all these positions, a very interesting pattern emerges .
Michael Berry doesn't appear to be betting against only four companies. It seems to be betting against one of Wall Street's favorite stories : artificial intelligence, massive investment in data centers, semiconductors, and ultimately against expectations that may have become too optimistic. However, before drawing conclusions, there is something we must be very clear about.
Every time Michael Berry opens a short position, the internet is filled with headlines announcing the next big market crash and the beginning of the financial apocalypse. But the reality is much more complex because Berry is not always right. And that's something that's often forgotten or not even mentioned.
Over the past few years, it has made several bearish bets that turned out to be premature. In some cases the market continued to rise for months. In others, the expected fall simply never came . In other words, being Michael Berry doesn't guarantee being right, but it does guarantee one thing: it's worth carefully analyzing what you're seeing.
Because although he can be wrong, he rarely takes positions without a thesis behind them. And that's precisely what we're going to do today. We're not going to copy Michael Berry, not at all. Nor are we going to assume that he is wrong. Let's try to understand what's right, because if we look at the four companies on which I've opened short positions, we discover something really interesting.
They all depend in one way or another on the continuation of the enormous investment cycle we are experiencing around artificial intelligence. Nvidia sells the chips, Applied Materials manufactures the machines needed to produce those chips, and Caterpillar benefits from the strong investment cycle in infrastructure and large industrial projects.
And Tesla no longer presents itself solely as an electric car company. Much of its valuation depends on the market believing in its future related to artificial intelligence, autonomous driving, and robotics. Chance? Probably not. And here's the big question: is Michael Burry saying that artificial intelligence is a bubble?
I think this would be too simplistic a conclusion. What he seems to be questioning is not the technology, but the expectations. Because a company can be extraordinary and still become a bad investment if the market pays too high a price for it. And that completely changes the conversation. We 're no longer talking about whether Nvidia is a great company or whether Tesla will continue to innovate.
We're talking about how much growth the market has already priced in , and whether those expectations are truly achievable. Because when a stock is trading near all- time highs and everyone expects it to continue growing for many years, the margin for disappointment also increases. And that's precisely where Michael Burry's thesis might lie.
Now, we come to the really important question: what is Michael Burry seeing that makes him bet against all these companies at the same time? Because although at first glance they seem like completely different businesses, when we delve a little deeper we find a common denominator. They all depend on the same narrative.
A narrative that has dominated Wall Street for the past few years. AI, and especially the enormous amount of money being invested in it. It does n't seem like Burry is saying that artificial intelligence is going to disappear, not at all. What he seems to be questioning is something else: expectations.
And that difference is enormous, because a technology can change the world and still generate losses for investors if expectations were too optimistic. History is full of examples. The internet changed the world, but that didn't stop hundreds of technology companies from losing more than 80% of their value when the dot-com bubble burst.
Not because the Internet was a failure, but because the market had discounted a perfect future too soon. And perhaps that's exactly what Burry is trying to say. Let 's start with Nvidia. Probably the company that best represents this entire AI revolution. Over the past few years, Nvidia has experienced one of the biggest price increases in recent Wall Street history.
His business has grown at a spectacular rate. Revenues have skyrocketed, and so have margins . And the demand for their chips remains extraordinary. So why would anyone bet against a company like that ? That's precisely why. When a company becomes the absolute favorite of the market, the margin for positive surprises begins to shrink.
The problem is no longer the company, the problem is the expectations. If Nvidia continues to grow by 30%, but the market expected 40%, the stock may fall, even though the business remains excellent. And I think that nuance is fundamental. Next we find Applied Materials, a company much less known to the general public, but absolutely essential to the entire semiconductor industry.
Applied manufactures the machinery used to produce the world's most advanced chips. In other words, if Nvidia sells the blades, Applied manufactures the tools to build these blades. During the last few years, all the major foundries have greatly increased their investment. TSMC, Samsung, Intel, they're all spending billions.
But here the same question arises again: can this pace be maintained for many years? Or we are experiencing an investment peak that will eventually normalize. If the answer is the second, Applied could be one of the most affected companies. Then Caterpillar appears. Many people here are surprised. What does Caterpillar have to do with AI?
Much more than it seems. Building new data centers requires a huge amount of heavy machinery, earthmoving, infrastructure, and industrial equipment. All of this indirectly benefits companies like Caterpillar. In addition, the company is also dependent on the global economic cycle. If the economy starts to slow down, if companies reduce their investments, or if major industrial projects begin to be delayed, Caterpillar could see a decrease in demand, and perhaps that is precisely what Burry is anticipating.
Then we find Tesla, probably the most controversial position, because Tesla has long since ceased to be valued solely as a car manufacturer. Much of its value depends on everything that doesn't yet exist: robotaxis, humanoid robots, autonomous driving, artificial intelligence. In other words, the market doesn't just buy current profits, it buys a vision of the future, and that makes Tesla a particularly sensitive company when expectations change.
If investors start demanding more immediate results, if technological advances take longer than expected, which is actually happening with Tesla, or simply if growth slows down, the valuation could suffer considerably. And that seems to be another one of Burry's messages. But perhaps the most interesting position is another one, the SOXX ETF.
The fund that brings together many of the leading companies in the semiconductor sector. Here we find a very revealing detail. Michael Burry hasn't closed that bet, he's renewed it. It has replaced its put options expiring in January 2027 with new options expiring in March 2027 and with higher strike prices .
In other words, he not only maintains his thesis, he is willing to give it more time to develop. And that seems much more significant to me than opening a new position, because it shows that he remains convinced that the sector can correct itself. So, does all this mean we should sell Nvidia, Tesla, and semiconductors?
I don't think so. And here I want to be very clear. One of the biggest mistakes an investor can make is trying to automatically copy someone else's trades , not even Michael Burry's. Because we don't know your entire portfolio, we don't know how you manage your risk, we don't know what percentage these positions represent, and we also don't know the rest of the hedges you may have open.
All we know is part of the story, and we should never make investment decisions based on that information. The truly interesting thing is not copying their movements, but understanding their reasoning, because it forces us to ask uncomfortable questions. Are we discounting too much growth in artificial intelligence?
Do valuations still make sense? Could companies justify current expectations in 5 years? These are questions we should all ask ourselves, even if the answer ends up being different. Personally, I think Michael Burry isn't betting against AI, he's betting against excessive optimism, and those are two quite different things.
AI will likely transform the economy over the next few decades, but that doesn't mean all AI-related stocks are good investments at any price. That's the difference between analyzing a company and analyzing a stock. Before finishing, I wanted to say something for those of you who follow the market in a bit more depth and in a more professional way.
In addition to the free content I publish here on YouTube, I also share a space on Patreon where each week I publish a report on the market, the companies I have on my radar, the main catalysts of the week, swing trading ideas, companies that present results and the news that can really move the markets.
. Do you think Michael Burry is ahead of the market again, or do you think Wall Street is right this time? I'll read your comments. .
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