'History points to downside': Michael Burry warns on Micron after Trump-linked donations

America’s biggest investor Michael Burry has opened a short position against Micron Technology (MU) arguing that the memory chipmaker’s stock has reached ‘historically extreme’ levels. Recently, Micron donated $250 million into Trump Accounts, the government's new savings scheme for American children. The $250 million breaks into two parts. Micron will match employee contributions dollar-for-dollar, up to $1,000 per child under 18, for workers who want to fund their kids' accounts. Separately, the company will drop a one-time $250 seed deposit into accounts for children living in counties where Micron has operations, spanning Idaho, New York, Virginia, California, Colorado, Minnesota, and Texas. However, Burry is not impressed with Micron. According to a report by Stocktwits, in a post on Substack, Burry said Micron’s recent increase was driven by AI hype and investor FOMO and not by fundamentals. He further added that company’s valuation and long-term cyclical history point to ‘significant downside’ ahead. The shares of Micron also fell 5.5% in last week’s regular session before recovering slightly in after-hours trading. Criticism of Micron’s fundamentalsBurry described Micron as the definition of a cyclical stock, noting that it has suffered 34 drawdowns of more than 30% over the past 42 years. He said the stock is now more extended above its 200-day moving average than at any point since 1984 — “not even during the dot-com peak.”He also criticised Micron’s profitability, citing a median return on invested capital of 4% and return on equity of 7%, calling them “frankly terrible.” According to Burry, one in every three quarters sees Micron “destroying capital,” with free cash flow negative nearly half the time.AI hype and political opticsBurry’s remarks came shortly after Micron reportedly made millions in donations to accounts linked to former President Donald Trump, a move that drew attention across financial circles. Burry suggested that such gestures may reflect misplaced confidence amid an overheated AI cycle. “History points to significant downside after periods of exuberance like this,” he wrote, implying that political and market enthusiasm are masking structural weaknesses.The Micron short aligns with Burry’s broader bearish stance on AI-linked semiconductor stocks. In June, he disclosed short positions in Nvidia (NVDA), Applied Materials (AMAT), and the iShares Semiconductor ETF (SOXX), predicting a 30% correction across the sector.At the same time, Burry increased long positions in PayPal, Sprouts Farmers Market, Zoetis, Fannie Mae, and Freddie Mac, signaling confidence in undervalued or defensive plays.Retail sentiment remains bullishDespite Burry’s warning, retail sentiment on Stocktwits remains bullish. Message volume around Micron has surged 260% in the past 90 days, with retail watchers up 4.1%. Many traders continue to view Micron as a key beneficiary of the AI boom, even as Burry cautions that history may soon repeat itself.Get the latest technology news and updates. Download the TOI App.