Key Takeaways:
Michael Burry told investors to buy Hong Kong stocks Friday, calling the dip a buying opportunity as a global chip sell-off deepened.
Michael Burry, the investor known for betting against the 2008 housing crisis, urged buying Hong Kong stocks Friday as a deepening global chip sell-off dragged semiconductor shares lower for a second day.
"Now is a good time to buy Hong Kong stocks on the dip," Burry, founder of Scion Asset Management, posted on X. "With Korean, Japanese and SOXX stocks fading, these should perform well."
The PHLX Semiconductor Sector Index fell 3% on Thursday, with TSMC dropping 3% even after reporting quarterly earnings that topped analysts' estimates. Memory-chip stocks led the declines: Sandisk, Seagate and Micron each fell more than 5%, while the Roundhill Memory ETF slid 7%. Nvidia traded near $207, down 2.4% on the day, extending a rough stretch for the sector that has persisted despite a string of solid earnings reports.
Burry's endorsement adds to a growing list of investors turning toward Hong Kong. Morgan Stanley has also recommended overweighting Hong Kong stocks, citing earnings optimism. The Hang Seng Index has lagged the global AI rally this year, making valuations relatively attractive compared with surging Korean and Japanese semiconductor shares that have benefited from the AI infrastructure boom.
TSMC, the world's largest contract chipmaker, said Thursday it would raise its 2026 capital expenditure forecast to as much as $64 billion, up from a prior range of $52 billion to $56 billion, and plans to invest another $100 billion in its Arizona operations. The increased spending — intended to meet AI-driven demand — failed to lift sentiment, suggesting investors are questioning whether the massive infrastructure buildout will generate commensurate returns.
A Bank of America survey of global fund managers this week found that many "trimmed July tech longs to hedge AI risks," but "no one is short," and semiconductors remain the "world's most crowded trade." The data points to a market caught between conviction in the AI theme and concern about stretched valuations. Even with recent losses, Sandisk leads the S&P 500's gainers for 2026 with shares up more than 500%, followed by AI server maker Dell, memory-chip maker Micron, and Seagate.
Burry's recommendation positions Hong Kong as a relative-value play in a market fixated on AI infrastructure spending. While chip stocks in Seoul and Tokyo have surged this year — SK Hynix has been one of the hottest names globally — Hong Kong-listed technology and value stocks have trailed, creating what Burry sees as a buying opportunity.
The investor, who counts PayPal among his portfolio holdings, has been applying similar value discipline elsewhere. Earlier this week, he called a $60.50 per share takeover bid for PayPal from Stripe and Advent International "simply too low," arguing the payments company's intrinsic value sits between $75 and $115 per share. PayPal shares closed at $55.52 on Wednesday, about 8% below the offer price, suggesting investors see some risk the deal stalls.
For investors, Burry's call adds a high-profile voice to the argument that the AI trade has become crowded and that capital may rotate toward underperforming markets. The Hang Seng Index's next test will be whether earnings season delivers the upside Morgan Stanley expects, and whether the chip sell-off deepens further before stabilizing. A fresh AI IPO from data center firm Csquare is set to begin trading Thursday, offering another gauge of investor appetite for the sector.
This article is for informational purposes only and does not constitute investment advice.
