Shares of Caterpillar tumbled 4.4% to $1,017.99 on July 1 after Michael Burry — the investor who famously profited from the 2008 housing crash — disclosed his first-ever short position against the heavy-equipment giant. Burry shorted CAT at $1,060.98 , writing in his Substack column that "this AI rally has reached a dangerous point." The selloff far outpaced the broader market, with the S&P 500 down just 0.59%, signaling investors are treating this as a company-specific valuation reckoning, not a macro wobble.
An Equipment Maker Priced Like a Tech Darling
CAT surged 86% in the first half of 2026, making it one of the best-performing stocks in the S&P 500 as investors embraced it as a proxy for the global AI infrastructure buildout. That rally has stretched valuations to extremes: CAT's trailing price-to-earnings ratio is roughly 146% above its 10-year median of 18.45 , and its five-year average P/E is just 19.98. In plain terms, investors are paying more than double the historical norm for each dollar of Caterpillar's earnings — a premium typically reserved for high-growth technology companies, not a cyclical industrial manufacturer.
Insiders Are Selling Into the Rally
Burry isn't the only one heading for the exits. Company insiders have collectively sold $167 million more than they bought over the last 12 months.
In just the past three months, insider selling totaled $87.6 million. When the people who know a company best are cashing out at record prices, it reinforces the bear case that the stock has outrun its fundamentals.
The "Picks and Shovels" Narrative Has Limits
Caterpillar itself is irrelevant to AI, but the market has treated it as a "pick-and-shovel" stock for global AI infrastructure because data center construction requires power generation, transmission, and civil engineering.
Management lifted full-year 2026 guidance to low double-digit sales growth and plans to triple large engine capacity by 2028. The business is genuinely benefiting — Q1 2026 revenue hit $17.42 billion, beating estimates — but low-double-digit revenue growth doesn't easily justify a stock price that has nearly doubled.
Burry's Track Record Demands Attention — With Caveats
On the same day, Burry also shorted Nvidia, Applied Materials, Tesla, and the semiconductor ETF SOXX , framing CAT as part of a broader basket bet rather than a standalone conviction. No 13F filing has confirmed the position's size; all current information comes from Burry's column, not regulatory filings. Burry has been early — sometimes painfully so — before. But with a ~$490 billion market cap riding on an AI narrative for a company that makes bulldozers, the gap between story and fundamentals is the real risk shareholders need to weigh.