Michael Burry, the investor known for predicting the subprime mortgage collapse in 2007 and inspiring The Big Short, has bet $1.1 billion against two of the world’s best-known artificial intelligence stocks – Nvidia and Palantir Technologies.
Regulatory filings show that as of September 30, Burry’s hedge fund Scion Asset Management bought put options on one million Nvidia shares worth about $187 million and five million Palantir shares worth $912 million – which benefit if prices fall.
The move marks Burry’s latest contrarian stance on one of Wall Street’s most hyped trends. In his first post in over two years on
His disclosure coincided with a broader market decline as fears of overheated valuations in the AI sector pushed U.S. indexes lower on Tuesday. The Vix volatility index, Wall Street’s so-called “fear indicator,” rose to a two-week high.
Nvidia, which recently became the first company to reach a market valuation of $5 trillion, fell 4 percent to $198.69 in New York trading. Palantir, whose shares have risen more than 360 percent in the past year, fell 8 percent to $190.70.
Although Palantir reported record quarterly revenue on Monday, it trades at nearly 250 times its 12-month earnings estimates – far more than Nvidia’s 33 and Microsoft’s 29.9.
Palantir CEO Alex Karp dismissed Burry’s bearish stance in an interview with CNBC: “The two companies he’s shorting are the ones making all the money, which is super weird. The idea that chips and ontology are what you want to short is completely crazy. He’s actually shorting AI.”
Meanwhile, Wall Street heavyweights Ted Pick, CEO of Morgan Stanley, and David Solomon, head of Goldman Sachs, warned that a market correction of 10 to 15 percent could be due after this year’s AI-driven rally.
Pick said at the Global Financial Leaders’ Investment Summit in Hong Kong: “We should welcome the possibility of declines that are not caused by a macro cliff effect.”
Solomon added: “When there are these cycles, things can go for a while. But there are always changes that change the mood – and none of us are smart enough to see them until they happen.”
The growing enthusiasm for generative AI has drawn comparisons to the dot-com bubble of the late 1990s, when speculative investments in Internet companies drove valuations to unsustainable levels.
However, some analysts argue that this cycle is different. The companies leading today’s AI revolution—like Nvidia, Microsoft, and Alphabet—have solid profits and are largely self-funding their multibillion-dollar AI infrastructure, in contrast to the debt-fueled exuberance of the dot-com era.
Whether Burry’s latest short bet will prove prescient remains to be seen – but history shows that when the Big Short investor spots a bubble, markets tend to listen.
