Burry's Bearish Bets Begin to Pay Off as Tesla and Caterpillar Tumble

Renowned investor Michael Burry has made headlines again after loading up on bearish bets across several AI-linked trades, including electric vehicles, heavy industry, and semiconductors. According to recent reports, his short positions on Tesla and Caterpillar have moved sharply in his favor during the July market pullback.

Burry disclosed that he shorted Tesla at $416.22 a share and Caterpillar at $1,060.98, which has since slid 16% to $894.54. Despite Tesla's drop, Burry hasn't covered the short, stating that it 'gets smaller all on its own.'

Four of the five publicly disclosed trades in Burry's basket have now turned in his favor, including a semiconductor ETF and Applied Materials, which have both fallen from the position where he shorted them. However, Nvidia is an outlier, climbing instead of falling.

Burry's chip-related bets have produced mixed results, with Applied Materials dropping more than 20% from $729.40 to around $562.80. In contrast, Nvidia has climbed past $210 after Burry increased his position on July 24, despite rising sales of roughly 85% year-over-year in its most recent quarter.

Caterpillar stands out as a unique case, with Burry having never shorted the stock before. He cited Caterpillar's 48.1 times trailing price-to-earnings multiple as pricing in more AI infrastructure than the cycle can sustain, especially if data center construction eventually slows.