Michael Burry says he’s shorting Caterpillar for the first time after it nearly doubled in the AI-driven rally of 2026

AI Market Analysis

Michael Burry’s decision to short Caterpillar (CAT) signals a growing skepticism toward the AI‑driven rally that has lifted heavy‑equipment stocks this year. By targeting not only CAT but also Nvidia, Applied Materials, Tesla and the SOXX semiconductor ETF, Burry suggests that valuations across the AI supply chain may be stretched, especially as price‑to‑sales ratios reach multi‑decade highs. Investors could see a pull‑back in risk‑on sentiment, prompting a rotation from high‑growth, AI‑linked equities toward more defensive sectors such as utilities, consumer staples, or financials that are less exposed to speculative infrastructure spending.

If Burry’s thesis gains traction, the broader market could experience heightened volatility, with the S&P 500’s AI‑heavy constituents potentially correcting. Semiconductor indexes may face pressure, and related currencies like the Korean won could weaken on expectations of reduced equipment orders. Traders might hedge exposure by shorting AI‑linked equities or increasing positions in safe‑haven assets such as Treasury bonds and gold.

Original Article

Michael Burry says he’s shorting Caterpillar for the first time after it nearly doubled in the AI-driven rally of 2026

Michael Burry said Tuesday he has placed a bearish wager against Caterpillar, believing the construction-equipment maker has become one of the market’s most overvalued beneficiaries of the artificial intelligence investment boom.
The famed investor said he shorted Caterpillar shares at $1,060.98, alongside new bearish positions in Nvidia, Applied Materials, Tesla and the iShares Semiconductor ETF (SOXX), as he prepared for what he believes is an increasingly overextended rally in AI-linked stocks.
“Caterpillar jumped out at me,” Burry wrote in a Tuesday SubStack post. “I have never shorted Caterpillar. It has always done great for me on the long side in the past.”
Caterpillar shares just capped off the first half of 2026 with an 86% gain, making the construction equipment giant one of the best-performing stocks in the S&P 500 this year as investors increasingly embraced it as a proxy for the global AI infrastructure buildout.
Burry said Caterpillar’s stock valuation has reached levels that caught his attention. He shared a chart showing Caterpillar’s price-to-sales ratio climbing to the highest level in at least three decades at the same time the stock surged to record highs.
The investor, who famously predicted and profited from the subprime mortgage crisis in 2008, also reiterated his broader concerns about semiconductor valuations. He said the Philadelphia Semiconductor Index is trading about 65% above its 200-day moving average, a level he said was only reached previously during the dot-com bubble in 2000.
“The proximate cause of today’s rally is big spending announced out of Korea. Well, I see that as the beginning of the end,” Burry said. “It is only a matter of time now.”

Source: CNBC

Disclaimer: this content is informational analysis only and does not constitute investment advice.