Nvidia Corp. has lost roughly $1 trillion in market value in less than two months, sending its valuation tumbling to levels not seen since before the AI boom ignited Wall Street's frenzy for chip stocks. The dramatic reversal has investors questioning whether the greatest bull run in semiconductor history has finally run its course.

The AI chipmaker's stock now trades at just 18 times projected earnings over the next 12 months—the lowest multiple since early 2019, before ChatGPT and generative AI transformed the technology landscape. For a company that briefly became the world's most valuable, the reset is stunning.

The Big Short Returns

Michael Burry, the hedge fund manager immortalized in "The Big Short" for predicting the 2008 housing crash, has turned his skeptical eye toward the AI chip sector. In recent regulatory filings, Burry revealed short positions against Nvidia, Micron Technology, Tesla, Applied Materials, Caterpillar, and the Philadelphia Semiconductor ETF (SOXX).

His Micron short was initiated around $1,051.87 per share—a level that represented an extreme gap from its 200-day moving average not seen since 1984. Burry has publicly compared the current AI rally to the dot-com bubble's excesses, warning that chip stocks have "raced ahead of the fundamentals."

"The beginning of the end," Burry wrote on social media in early July, just before semiconductor stocks cratered.

The Chip Collapse

The selloff has been swift and brutal. On July 1 and 2, the Philadelphia Semiconductor Index (SOX) dropped 6.3% and 5.5% respectively, erasing months of gains. Samsung Electronics' record-breaking earnings report—revenue up 28% sequentially with operating profit surging 19-fold—failed to impress markets already spooked by valuation concerns.

In a single session on June 5, roughly $1.4 trillion evaporated from semiconductor stocks. Nvidia shed $279 billion alone, while Marvell Technology plummeted 17% and Micron fell over 13%.

The Rotation Trade

What makes this selloff particularly notable is where the money is flowing. The Dow Jones Industrial Average has surged to record highs above 53,000, as investors rotate from high-flying AI plays into traditional value stocks. The "Great Rotation" has seen old-economy stalwarts outperform the tech giants that dominated portfolio returns for years.

This divergence—the Dow hitting all-time highs while the Nasdaq struggles—hasn't been seen at this magnitude in years. Fund managers are de-risking AI exposure ahead of what many believe will be increased competition and potential overcapacity in the chip market.

Record Earnings, Falling Stocks

Perhaps most perplexing is that semiconductor companies continue to post exceptional results. Nvidia's latest quarter showed $81.6 billion in revenue, up 85% year-over-year. Samsung's Q2 2026 operating profit was its strongest ever. Yet investors have adopted a "sell the news" mentality, dumping shares even as fundamentals exceed expectations.

The disconnect suggests Wall Street is pricing in future risks: potential overinvestment in AI infrastructure, Chinese competition from players like Huawei, and questions about whether the hundreds of billions being poured into data centers will generate sufficient returns.

What Comes Next

Bulls argue that AI demand remains insatiable and that the pullback represents a healthy correction after an unprecedented run. Bears, led by Burry, contend that valuations became divorced from reality and that the sector faces years of multiple compression.

For retail investors who piled into AI stocks over the past two years, the message is sobering: even transformative technologies can become overpriced. The internet fundamentally changed civilization, but investors who bought at the 2000 peak waited 15 years to break even.

Whether Nvidia's $1 trillion reset marks a buying opportunity or the start of a prolonged downturn will depend on whether AI's commercial applications justify the infrastructure investment. For now, Michael Burry is betting history repeats itself—and on Wall Street, "The Big Short" investor has a track record worth taking seriously.