Michael Burry, the investor famous for his Big Short bet against mortgage-backed securities, has publicly disclosed a short position in Caterpillar (CAT) — his first ever against the industrial giant. Burry noted the stock "jumped out" at him after nearly doubling in what he characterizes as an AI-driven infrastructure rally in 2026, a surge he apparently views as detached from underlying value.
Caterpillar's most recent fiscal year (ending December 2025) showed revenues of $67.6B, up 4.3% year-over-year, with diluted EPS of $18.81 and a net margin of 13.1%. These are solid numbers for an industrial company, but a near-doubling in share price on the back of AI infrastructure enthusiasm raises the question of whether the valuation has run well ahead of earnings power.
Burry's historical relationship with CAT is notable: he explicitly says it has "always done great" for him on the long side, making this a genuine conviction reversal rather than a reflexive short. The AI data-center buildout narrative has swept up heavy equipment names on the thesis that massive construction activity will sustain demand — a thesis Burry appears to be fading.
The bull case rests on continued infrastructure spend tied to AI and energy transition, with CAT's revenue trajectory and margins showing no cracks yet. The bear case is valuation: a near-double in share price against mid-single-digit revenue growth implies significant multiple expansion that could unwind sharply if AI capital expenditure cycles cool or if earnings disappoint.
Key things to watch: CAT's next earnings print for any guidance revision, broader capex announcements from hyperscalers (which underpin the AI infrastructure thesis), and whether Burry's short disclosure triggers additional institutional scrutiny of the name.