Renowned “Big Short” investor Michael Burry has recently shifted gears, redirecting his bearish sentiments from the broader market to a more targeted sector.
Third-quarter securities filings revealed a notable departure from Scion Asset Management’s pessimistic stance on the S&P 500 and Nasdaq-100, resulting in a significant loss. The filings unveiled a strategic move as Scion entered the market with $47.4 million worth of put options, zeroing in on the iShares Semiconductor ETF (SOXX).
However, Burry’s bearish position on SOXX faces challenges, as semiconductor stocks within the ETF experience robust price surges amid the ongoing AI-driven market rally.
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What’s more, one of these semiconductor companies, integral to the ETF, stands poised to amplify its recent gains after unveiling its most powerful AI chip yet.
Why is Burry’s bearish trade at potential risk?
Advanced Micro Devices (NASDAQ: AMD), one of the world’s leading chipmakers and one of the biggest constituents of the SOXX ETF, announced on December 6 the launch of its most powerful AI chip yet, MI300X.
The product, which AMD believes could challenge Nvidia’s (NASDAQ: NVDA) dominance in the AI chip market, is “the most advanced AI accelerator in the industry,” said the company’s CEO Lisa Su. The Chief Executive claimed MI300X is more powerful than Nvidia’s current best-in-class counterpart, H100.
To be more specific, AMD’s newest offering has a higher memory and bandwidth than Nvidia’s H100 and has outperformed it in several benchmarks, according to Kris Heyndrikx, founder of Potential Multibloggers.
Heyndrikx said he added to his AMD position following the MI300X launch, suggesting he expects the chip to become a potential catalyst for the chipmaker’s shares.
However, the stock investor acknowledged it is unlikely that the MI300X “will win the battle against the H100,” mainly because of Nvidia’s incredibly strong software.
“Nvidia has its stable CUDA platform, a real competitive advantage, in my opinion.”
– the investor wrote in his X post.
Still, he expects the MI300X to attract significant demand, especially when taking into consideration that the H100 “is chronically sold out.”
AMD agrees MI300X deals with OpenAI, Microsoft, and Meta
AMD has already reached deals with leading AI and tech firms including OpenAI, Microsoft (NASDAQ: MSFT), and Meta Platforms (NASDAQ: META), all of which will begin using MI300X.
With a robust client base, and the unprecedented demand for AI chips, “the MI300X could propel AMD forward,” Heyndrikx concluded.
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