Burry’s move against AMD: A costly mistake?

Michael Burry


IMPORTANT POINTS:

  • Michael Burry has shifted his bearish focus to semiconductor stocks, specifically the SOXX ETF.
  • AMD has launched the MI300X AI chip, challenging Nvidia and attracting attention in the market.
  • Major deals with OpenAI, Microsoft, and Meta indicate a promising future for the MI300X and possibly AMD stock.

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Michael Burry, renowned “The Big Short” investor, has recently changed strategy, shifting his bearish sentiment from the broader market to a more specific sector.

Third-quarter stock filings revealed a notable departure from Scion Asset Management’s bearish stance on the S&P 500 and Nasdaq-100, resulting in a significant loss. The filings showed a strategic move when Scion entered the market with $47.4 million in put options, focusing its attention on the iShares Semiconductor ETF (SOXX).

However, Burry’s bearish position on SOXX faces challenges, as semiconductor stocks within the ETF experience sharp price gains amid the current AI-driven market surge.

Additionally, one of these semiconductor companies, integral to the ETF, is set to amplify its recent gains after unveiling its most powerful AI chip to date.

Why Burry’s bearish bet is at risk?

Advanced Micro Devices (AMD), one of the world’s leading chip makers and a major component of the SOXX ETF, announced on December 6 the launch of its most powerful AI chip to date, the MI300X.

The product, which AMD believes could challenge Nvidia’s (NVDA) dominance in the AI ​​chip market, is “the most advanced AI accelerator in the industry,” said company CEO Lisa Su. The CEO claimed that the MI300X is more powerful than Nvidia’s current best counterpart, the H100.

To be more specific, AMD’s new offering has higher memory and bandwidth than Nvidia’s H100 and has outperformed it in several performance tests, according to Kris Heyndrikx, founder of Potential Multibloggers.

Heyndrikx said he increased his position in AMD following the launch of the MI300X, suggesting he expects the chip to become a potential catalyst for the chipmaker’s stock.

However, the investor acknowledged that the MI300X is unlikely to “win the battle against the H100,” mainly due to Nvidia’s incredibly strong software.

“Nvidia has its stable CUDA platform, a real competitive advantage, in my opinion.”Heyndrikx

Still, he expects the MI300X to attract significant demand, especially given that the H100 “is chronically out of stock.”

AMD agrees to MI300X deals with OpenAI, Microsoft and Meta

AMD has already reached agreements with major AI and technology companies, including OpenAI, Microsoft (MSFT), and Meta Platforms (META), all of which will begin using the MI300X.

With a strong customer base and unprecedented demand for AI chips, “the MI300X could propel AMD forward,” Heyndrikx concluded.