Watch Out NVDA Stock Investors: Michael Burry of Big Short Fame Isn’t Feeling the Chip Rally Anymore.

One of the most famed short sellers of all time, made famous for his large (and correct) bets before the Great Financial Crisis against the U.S. housing market, Michael Burry has become a controversial voice on macro trends. His ability to call out largess and overvaluation in key sectors has spurred debates among investors who take either side of the coin.

For one group, Michael Burry has prognosticated about overvaluation for some time—and he's been right, directionally. For the other group (those who are bullish on various macro trends), the thinking is that he's left money on the table, considering the rally we've had in recent years and the willingness of Burry and others to take the opposite side of the trade. Timing is everything with going short any particular asset class, and given the difficulty of going short any particular segment for an extended period of time, being early can be just as bad as being late. 

We'll have to see just how early to the party Burry is on the topic of memory and chip stocks, as the investor announced a short position in Micron Technology (MU), as well as Nvidia (NVDA), Applied Materials (AMAT), and a basket of securities within the semiconductor sector as well.

What Do These Bets Mean?

Overall, Micheal Burry's intuition around certain trends is one I wouldn't want to bet against. That said, of course, the timing behind such bets is what's difficult for investors to ascertain.

At this point in the market cycle, it's clear that investors are increasingly cautious around valuations and are looking for growth at a reasonable price (over growth at any price). Indeed, in such a market, it's entirely possible that Burry could be proven correct over a relatively short window.

We'll see. Nvidia's valuation is one that has been harped on for quite some time, and I'll be the first to say I've been critical of the world's largest chipmaker's valuation for years. That said, at this point, Nvidia is finally starting to look reasonable from a valuation perspective, so I'm on the fence regarding whether Burry and those who are bearish on this revolution will ultimately be correct. 

From a fundamentals perspective, Nvidia's forward price-earnings multiple of just 22 times isn't expensive by any stretch. In fact, I've said it before, but given Nvidia's weighting in the overall indices many investors own, this is a stock that's relatively undervalued. 

As such, NVDA's long-term upside, given the impressive growth drivers underpinning the AI revolution, should mean this is a stock that ought to be oversubscribed at current levels. To a certain extent, Nvidia has already seen plenty of that oversubscription pulled forward.

Perhaps Burry is making a bet on the broader shift in market sentiment around chip and memory names, and he'll ultimately be right. I don't know. But for now, I'd say this thesis is at least in question, given the sustained positivity investors have shown of late in the face of tariffs, wars, and other headwinds that have materialized this year alone. 

Does Wall Street Agree With Michael Burry?

For now, Wall Street analysts do not appear to be on the same page as Michael Burry. Quite the opposite, actually. 

The current consensus price target of more than $300 per share for NVDA stock implies roughly 50% upside for it over the next year alone. With a high price target of $500 on Nvidia (a roughly 150% gain from here), it's clear that there are very differing views around where this stock is headed, but most think the direction of movement will be higher.

Personally, I think the $180 low price target on the Street is perhaps the most telling. That's because NVDA stock is now approaching this low price target, suggesting even the most bearish analysts out there now believe NVDA is likely fairly valued.

I think NVDA stock is starting to look attractive here and would actually take the opposite side of the bet Michael Burry is making right now, at least in the short term.