Michael Burry Shorts Caterpillar After Near-Doubling in AI Rally
The 'Big Short' investor takes his first-ever bearish position on Caterpillar, citing its dramatic run-up during the AI-driven market rally of 2026.
Michael Burry, the contrarian investor immortalized in "The Big Short," has opened a short position against Caterpillar for the first time in his career — a notable pivot for someone who has historically profited from owning the industrial giant's shares on the long side. The move comes after Caterpillar nearly doubled in value during the AI-driven market rally of 2026, a surge that apparently caught Burry's attention as a potential overextension.
"Caterpillar jumped out at me," Burry said, acknowledging the unusual nature of the bet. "I have never shorted Caterpillar. It has always done great for me on the long side in the past." That candor underscores the deliberateness behind the call — this isn't reflexive skepticism toward a company he dislikes, but rather a valuation-driven thesis born from watching a well-regarded industrial name nearly double in price.
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The broader context matters here. The AI investment boom has lifted not just technology stocks but a wide constellation of so-called picks-and-shovels plays — companies that supply infrastructure, machinery, and raw materials for data center construction and industrial expansion. Caterpillar, as a major manufacturer of heavy equipment, has benefited from that narrative. Burry's short suggests he believes the market has priced in too rosy a scenario for the company's earnings trajectory.
Burry built his reputation by identifying dislocations between market price and underlying fundamentals — most famously in the mid-2000s housing bubble. A short on Caterpillar, a company with a long track record of rewarding patient investors, signals that he sees a meaningful gap between where the stock is trading and what the business can realistically deliver. Whether the AI infrastructure buildout sustains demand for heavy equipment at the levels the market implies remains the central question investors will now be watching closely.
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