Michael Burry disclosed on Thursday that he has opened a short position in Micron Technology Inc. (MU) while adding to five long positions. Burry stated that the memory chipmaker's rally has reached historically extreme levels. He attributed Micron's recent gains to fear of missing out and AI hype rather than fundamental analysis, citing the company's median return on invested capital of 4% and median return on equity of 7% as 'frankly terrible.' The move aligns with Burry's broader bearish stance on semiconductors, following his June 30 disclosure of short positions in Nvidia, Applied Materials, and the iShares Semiconductor ETF.
Shares of MU ended the regular session on Thursday 5.50% down, before gaining 0.15% in after-hours trading. The stock has gained 248% year-to-date.
Burry Cites Historic Extremes in Micron Valuation
Burry stated in a Substack post that Micron is now more extended above its 200-day moving average than at any point since 1984, 'not even during the dot-com peak.' He noted that the stock has suffered 34 drawdowns of more than 30% over the last 42 years, adding that 'Micron defines cyclical like no other.'
Burry criticized Micron's long-term profitability, stating that its median return on invested capital of 4% and median return on equity of 7% are 'frankly terrible.' He added that 'one quarter in every three, Micron is a destroyer of capital,' pointing to decades of negative returns and free cash flow that has been negative nearly 'half the time.'
AI Rally and Profitability Concerns Drive Short Thesis
Burry said Micron's recent rally has been driven by 'fear of missing out, greater fool theory, [and] public commitment bias,' rather than 'rational analysis.' He contended that the company is no longer the leader in memory, stating that capital spending plans in South Korea largely dictate how much Micron must spend.
On high-bandwidth memory (HBM), Burry said, 'HBM is the new product, but it is just another in a very long series.' He added that the trend fits within his broader AI bubble thesis. Burry stated he shorted Micron directly because 'the puts seemed expensive,' adding that he 'will look to add puts should the stock settle down and bring volatility down.'
Burry Adds to Five Long Positions at Disclosed Prices
Alongside the Micron short, Burry increased stakes in PayPal Holdings (PYPL), Sprouts Farmers Market (SFM), Zoetis (ZTS), Federal National Mortgage Association (FNMA), commonly known as Fannie Mae, and Freddie Mac (FMCC).
Burry disclosed additions to PayPal at $45.31, Sprouts Farmers Market at $89.33, Zoetis at $74.80, Fannie Mae at $6.15, and Freddie Mac at $5.69.
Retail Sentiment Remains Bullish on Stocktwits
On Stocktwits, retail sentiment for MU was 'bullish,' with message volume being 'high.' In the past 90 days, message volume around the stock has surged by 260%, while its retail watcher base gained 4.1% in the same period.
FAQ
Why did Michael Burry short Micron stock on Thursday?
Burry stated that Micron's rally has reached historically extreme levels, with shares more extended above their 200-day moving average than at any point since 1984. He cited the company's median return on invested capital of 4% and median return on equity of 7% as 'frankly terrible,' and attributed the recent rally to fear of missing out and AI hype rather than fundamental analysis.
What long positions did Burry add to alongside the Micron short?
Burry increased stakes in PayPal Holdings at $45.31, Sprouts Farmers Market at $89.33, Zoetis at $74.80, Fannie Mae at $6.15, and Freddie Mac at $5.69.
How has Micron stock performed year-to-date?
The MU stock has gained 248% year-to-date. Shares ended the regular session on Thursday 5.50% down, before gaining 0.15% in after-hours trading.
