Caterpillar NYSE:CAT shares pulled back nearly 7% Wednesday after Michael Burry (Trades, Portfolio) said he had opened his first short position in the industrial giant. The stock had just closed at an all-time high of $1,064.90, with Burry announcing a short position at $1,060.98. The move came after Caterpillar rallied more than 150% over the past 12 months, partly as investors linked its power equipment business to the AI data-center buildout.
Burry's warning also extended beyond Caterpillar, as he disclosed short positions in Nvidia NASDAQ:NVDA, Applied Materials NASDAQ:AMAT, the iShares Semiconductor ETF NASDAQ:SOXX, and Tesla NASDAQ:TSLA. With the exception of Tesla, those securities declined Wednesday. Applied Materials dropped more than 11% after gaining nearly 150% this year, SOXX fell more than 6% after doubling this year, and Nvidia slid 3.3% before trimming losses.
The broader concern is that AI-linked stocks could be running ahead of fundamentals after chip shares posted a sharp rally. The Philadelphia Semiconductor Index rose 88% in the second quarter and 101% in the first half, putting it on pace for what could be its strongest year. Burry called SOXX a rare form of index overvaluation and pointed to the chip index's unusually high extension above its 200-day moving average, while his Tesla short appears to build on earlier concerns around valuation and potential shareholder dilution.