Caterpillar shares fall after Michael Burry shorts amid AI rally

Investor Michael Burry disclosed on Tuesday that he had taken a short position in Caterpillar, opening the trade at $1,060.98. The stock fell about 5% the next trading day while the broader S&P 500 traded higher.

Burry revealed the position in a Substack post and said he included Caterpillar as part of a group of bearish bets that also targets Nvidia, Applied Materials, Tesla and the iShares Semiconductor ETF (SOXX). “Caterpillar jumped out at me,” he wrote, adding that he had not shorted the company before and had previously held it as a long position.

Burry pointed to valuation metrics as a primary reason for the bet. He noted Caterpillar trades at about 39 times expected earnings over the next 12 months, compared with roughly 13 times three years ago. The stock is trading at about six times expected sales, above its historical long-term range of one to two times sales. He shared a chart showing the company’s price-to-sales ratio at its highest level in at least three decades.

Caterpillar reported a 22% year-over-year increase in first-quarter sales for its Power and Energy segment, a result the company and investors attribute in part to rising electricity demand from data centers. The company’s shares have risen sharply: up about 86% in the first half of 2026 and roughly 172% over the past 12 months.

Burry also raised concerns about the semiconductor and AI-related sectors, noting the Philadelphia Semiconductor Index is roughly 65% above its 200-day moving average. He linked recent gains to large spending announcements from Korea and wrote, “The proximate cause of today’s rally is big spending announced out of Korea. Well, I see that as the beginning of the end. It is only a matter of time now.”

Analyst coverage remains broadly positive. Data tracking analyst recommendations shows 10 of 16 analysts have Buy ratings on the stock, with an average 12-month price target of $991.94, about 2% below the share price at the time of Burry’s disclosure.

The trading episode highlights that investor interest in artificial intelligence has extended to industrial firms that supply power and infrastructure for data centers. Market participants will monitor upcoming earnings reports, sales trends and semiconductor spending announcements for further signals about valuation and demand.