In a Sunday Substack post, hedge fund manager Michael Burry said almost all of his short exposure now consists of put options on two instruments: the Nasdaq-100 Index and the VanEck Semiconductor ETF (NASDAQ:SMH).

His Nasdaq-100 puts expire in April 2027, while his SMH puts expire in June 2027. Both positions are roughly 20% out of the money, according to his post.

Burry said he believes the market is within zero to nine months of a significant top, arguing that the final stages of the bull market could become volatile as major indexes reach new highs.

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SMH is Central to Burry’s Thesis

Nvidia Corp (NASDAQ:NVDA) accounts for 19.6% of SMH, followed by Taiwan Semiconductor Manufacturing (NYSE:TSM) at 9.3% and Advanced Micro Devices Inc (NASDAQ:AMD) at 5.6%. Together, the three stocks represent 34.5% of the portfolio. Broadcom Inc (NASDAQ:AVGO), Micron Technology, Inc (NASDAQ:MU), Marvell Technology Inc (NASDAQ:MRVL) and Applied Materials Inc (NASDAQ:AMAT) each account for around 5%.

That concentration makes SMH particularly sensitive to changes in semiconductor demand, AI infrastructure spending and investor expectations for future earnings.

A slowdown in hyperscaler capital expenditure or disappointment in chipmakers’ growth forecasts could pressure the ETF. Conversely, sustained AI investment and strong earnings could undermine Burry’s bearish position.

4 Other ETFs to Watch as Burry’s Warning Unfolds

These ETFs offer different ways to assess semiconductor and broader technology exposure.

  • Invesco QQQ Trust (NASDAQ:QQQ): Tracks the Nasdaq-100, making it a broader gauge of large-cap growth stocks that could face pressure if investors rotate away from expensive technology shares.
  • iShares Semiconductor ETF (NASDAQ:SOXX): Provides a comparison with SMH. SOXX returned 79% year to date, underscoring the scale of the semiconductor rally that Burry is challenging.
  • ProShares Short QQQ (NYSE:PSQ): Seeks daily returns that are the inverse of the Nasdaq-100’s performance, offering a bearish alternative without directly purchasing put options. Its daily objective makes it unsuitable as a straightforward long-term substitute for Burry’s trade.
  • Direxion Daily Semiconductor Bear 3X Shares (NYSE:SOXS): Offers a more aggressive alternative to Burry’s bet. The ETF targets three times the inverse of its semiconductor benchmark’s daily performance, amplifying gains during a sector downturn but magnifying losses if chip stocks rally. Unlike Burry’s long-dated SMH put options, SOXS resets daily, making it primarily a short-term trading instrument rather than a direct replica of his strategy.

Whether Burry’s market-top warning proves right remains to be seen, but his shift toward Nasdaq-100 and semiconductor puts puts the AI trade’s biggest winners under scrutiny.

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Photo: generated using artificial intelligence via Midjourney.