Michael Burry’s investment firm, Scion Asset Management, disclosed a substantial reduction in its holdings of Nvidia Corp. (NVDA) stock in a regulatory filing dated 9 July 2026. The firm sold a significant portion of its stake acquired in the previous quarter, just as Nvidia shares approached record highs. This action by the investor famed for accurately predicting the 2008 financial crisis introduces a note of caution into the fervent artificial intelligence-driven chip rally. Nvidia’s stock had appreciated over 150% year-to-date at the time of the filing, buoyed by unprecedented demand for its AI accelerators.
Context — [why this matters now]
Michael Burry’s market moves are closely scrutinized due to his high-profile success in betting against the US housing bubble. His bearish stance often focuses on identifying market manias and unsustainable valuations. The current disclosure comes amidst a historic rally in semiconductor stocks, fueled by generative AI advancements and massive capital expenditure from cloud providers.
The last time Burry voiced significant public skepticism toward a popular tech trade was in 2021, when he warned of meme stock and cryptocurrency speculative bubbles. He closed his short position on the ARK Innovation ETF (ARKK) after the fund declined over 60% from its peak. The current macro backdrop features sustained high interest rates, with the Fed funds target range at 5.25%-5.50%, increasing the cost of capital for growth-oriented tech companies.
The immediate catalyst for this scrutiny is the Q2 2026 13F filing deadline, which requires institutional investment managers to disclose their US equity holdings. Burry’s decision to scale back his Nvidia position as it reached all-time highs suggests a valuation-based reassessment. This move contrasts sharply with the prevailing bullish sentiment from many large asset managers.
Data — [what the numbers show]
Nvidia’s market capitalization surpassed $3.2 trillion in early July 2026, making it one of the most valuable publicly traded companies globally. The stock’s year-to-date gain of over 150% significantly outpaced the S&P 500’s return of approximately 12% over the same period. Nvidia’s forward price-to-earnings ratio expanded to nearly 40x, compared to the S&P 500’s average of about 20x.
Scion’s filing showed it held 40,000 NVDA shares as of 30 June 2026, down from 160,000 shares held at the end of Q1 2026. This represents a 75% reduction in the firm’s stake. At Nvidia’s average Q2 share price of around $125, the disclosed sale involved stock worth approximately $15 million.
The VanEck Semiconductor ETF (SMH), a benchmark for the sector, rose 45% year-to-date. Nvidia’s performance within the ETF was dominant, contributing a disproportionate share of the gains. Peer companies like Advanced Micro Devices (AMD) and Broadcom (AVGO) saw year-to-date returns of 35% and 25%, respectively, indicating a broad-based but Nvidia-led rally.
| Metric | Nvidia (NVDA) | VanEck Semiconductor ETF (SMH) |
|---|
| YTD Return (approx.) | +150% | +45% |
| Forward P/E Ratio | ~40x | ~25x |
Analysis — [what it means for markets / sectors / tickers]
Burry’s reduced position implies a view that Nvidia’s extraordinary growth may be priced in, posing asymmetric risk for new investors. This action could signal caution for the entire AI supply chain. Second-order effects may include increased volatility for semiconductor capital equipment firms like Applied Materials (AMAT) and ASML Holding (ASML), which have ridden the wave of expanded chip manufacturing forecasts.
A key counter-argument is that Burry’s trade timing has been premature in the past; his early 2021 Tesla short faced significant mark-to-market losses before the stock eventually corrected. The fundamental demand for AI computing power from major cloud providers like Microsoft Azure, AWS, and Google Cloud remains strong, supporting elevated revenue projections for Nvidia.
Positioning data indicates hedge funds had built significant long exposure to semiconductors, making the sector vulnerable to a momentum reversal. A sustained downturn in Nvidia could trigger deleveraging flows out of related tech and growth stocks. Conversely, a rotation into undervalued sectors like energy or healthcare could occur if AI enthusiasm wanes.
Outlook — [what to watch next]
The primary near-term catalyst is Nvidia’s Q2 2026 earnings report, scheduled for late August. Investors will scrutinize guidance for data center GPU sales and any commentary on order book sustainability. The Fed’s next interest rate decision on 23 July will also impact the valuation math for all long-duration growth stocks.
Technical levels to monitor for NVDA include the 50-day moving average, currently near $118, as a key short-term support. A break below the $110 level, which provided support in May 2026, could signal a deeper correction. Upside resistance is seen around the recent all-time high of $140.
The Philadelphia Semiconductor Index (SOX) trading relative to its 200-day moving average will indicate broader sector health. A decline below this long-term trend line, currently 15% below the index level, would confirm a significant sector-wide sentiment shift.
Frequently Asked Questions
What is Michael Burry's investment strategy?
Michael Burry employs a deep-value, contrarian strategy, often using fundamental analysis to identify market inefficiencies and potential bubbles. He gained fame for his successful bet against the subprime mortgage market, which was documented in The Big Short. His approach involves taking significant positions against widely held market beliefs when he identifies unsustainable valuations or structural flaws, even if the timing appears early.
How does Nvidia's current valuation compare to the dot-com bubble?
During the peak of the dot-com bubble in March 2000, the Nasdaq 100 index traded at a price-to-sales ratio of approximately 7.5. Nvidia’s current price-to-sales ratio is around 18, significantly higher than the broader tech index at that historical peak. However, Nvidia’s current profitability and revenue growth rate far exceed those of typical dot-com companies, which often had minimal earnings.
What other stocks has Michael Burry traded recently?
Recent Scion 13F filings have revealed positions in private prison operators like Geo Group (GEO) and healthcare companies, sectors often overlooked by mainstream investors. Burry has also held positions in regional banks, indicating a focus on unloved and potentially undervalued segments of the market. This contrasts sharply with the popular momentum-driven trades in large-cap technology.
Bottom Line
Michael Burry's Nvidia stake reduction signals a high-profile bet against the sustainability of the AI chip stock rally.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.
