Burry shorts Caterpillar after it nearly doubled in AI rally of 2026
Michael Burry, the famed investor who famously predicted and profited from the subprime mortgage crisis in 2008, has made a bold move by placing a bearish wager against Caterpillar. In a recent SubStack post, Burry revealed that he has shorted Caterpillar shares at $1,060.98, citing concerns about the construction-equipment maker being overvalued in the current market environment.
Burry’s decision to short Caterpillar comes as part of a broader strategy to bet against companies that he believes have become overextended due to the artificial intelligence investment boom. In addition to Caterpillar, Burry has taken bearish positions in Nvidia, Applied Materials, Tesla, and the iShares Semiconductor ETF (SOXX). He believes that these stocks are at risk of a significant pullback as investors start to question the lofty valuations of AI-related companies.
One of the key reasons behind Burry’s decision to short Caterpillar is the stock’s impressive performance in the first half of 2026. With an 86% gain, Caterpillar has been one of the best-performing stocks in the S&P 500 this year, fueled by investor enthusiasm for the company’s role in the global AI infrastructure buildout. However, Burry believes that the stock’s valuation has reached unsustainable levels, prompting him to take a contrarian stance.
In his SubStack post, Burry shared a chart showing Caterpillar’s price-to-sales ratio reaching its highest level in at least three decades. This metric, combined with the stock’s record highs, led Burry to believe that Caterpillar was ripe for a correction. He also expressed concerns about semiconductor valuations, pointing to the Philadelphia Semiconductor Index trading 65% above its 200-day moving average, a level reminiscent of the dot-com bubble in 2000.
Despite the recent rally in AI-linked stocks, Burry remains skeptical about the sustainability of the trend. He views the recent surge in semiconductor stocks as a sign of an overheated market, fueled by big spending announcements out of Korea. Burry sees this as the “beginning of the end” and warns that it is only a matter of time before the market corrects itself.
As investors digest Burry’s bearish stance on Caterpillar and other AI-related stocks, it will be interesting to see how the market reacts. Burry’s track record of making contrarian bets and profiting from market downturns gives weight to his latest move, making it a story worth following for investors looking to navigate the current market environment.
