Michael Burry, the famed investor portrayed in “The Big Short” and known for accurately forecasting the 2008 financial collapse, has made headlines again with a staggering $1.1 billion bet against two of the most prominent companies in the artificial intelligence sector: Nvidia and Palantir Technologies. Through the use of put options disclosed in a recent filing, Burry’s hedge fund, Scion Asset Management, signaled a bearish stance on these AI-driven tech giants, sending ripples across the stock market.
This bold move came despite strong quarterly earnings from Palantir, which not only surpassed Wall Street expectations but also raised its full-year revenue forecast. Nevertheless, the company’s stock plummeted by as much as 16% during intraday trading on Tuesday, ultimately closing the day down around 8%. Nvidia wasn’t spared either, with its shares slipping between 2% and 4%. The broader tech-heavy Nasdaq Composite dropped nearly 2%, marking its steepest daily decline in almost a month.
Burry’s position appears to be a direct challenge to the prevailing optimism around artificial intelligence, which has fueled a significant rally in tech stocks throughout 2023. Nvidia, in particular, has been a poster child for the AI boom, with its graphics processing units (GPUs) becoming essential components for AI model training. Palantir, on the other hand, has positioned itself as a key player in delivering AI-powered software solutions to governments and enterprises alike.
Burry has been vocal about his concerns regarding speculative excess in financial markets. His recent short positions reflect a broader skepticism about the sustainability of current tech valuations, particularly those driven by what he sees as hype surrounding AI breakthroughs. In past interviews and public statements, he’s warned repeatedly about bubbles forming in various asset classes, and this latest move underscores his belief that investors may be overestimating the near-term profitability and scalability of AI technologies.
Palantir CEO Alex Karp responded to the market reaction with visible frustration, emphasizing that the company’s fundamentals remain strong and that it continues to see robust demand for its AI products. “I don’t think the market understands how deeply embedded our technology is becoming,” Karp noted, defending the company’s long-term vision.
Burry’s $1.1 billion wager isn’t just symbolic—it’s one of the largest single short positions disclosed by his firm in recent years. The use of put options suggests he’s not just betting on a mild correction but is anticipating a significant downturn in these stocks’ valuations. This has led many analysts to speculate about what Burry sees that others might be missing.
Historically, Burry has shown an uncanny ability to identify overpriced assets and profit from their decline. His prescient bets against mortgage-backed securities in the mid-2000s earned him massive returns and a legendary status on Wall Street. While not all his positions have been as successful, his bearish calls often command serious attention from institutional and retail investors alike.
The broader implications of Burry’s bet extend beyond Nvidia and Palantir. As other members of the so-called “Magnificent Seven” tech stocks—Apple, Amazon, Meta, Microsoft, Alphabet, Nvidia, and Tesla—continue to dominate market indices, skepticism from a renowned contrarian like Burry could be a signal of growing unease in the markets. Indeed, the tech sector’s dominance has raised concerns about market concentration and the vulnerability of major indices to sector-specific shocks.
In addition to his AI-related shorts, Scion Asset Management has also trimmed positions in other high-growth stocks in recent quarters, indicating a broader shift toward defensive positioning. Burry has been steadily increasing cash allocations and diversifying into more value-oriented assets, suggesting he’s preparing for a prolonged period of market volatility.
Some experts argue that Burry’s bearish stance may be premature. The AI industry, while certainly frothy in places, is also undergoing genuine transformation, with real-world applications expanding across healthcare, finance, defense, and logistics. Nvidia’s revenue, for example, has seen explosive growth due to surging demand from AI startups and cloud providers.
Still, others point to historical parallels. The dot-com bubble of the early 2000s saw technology stocks skyrocket on the promise of a digital revolution—many of which never materialized. While AI may be the future, Burry seems to be betting that current valuations are pricing in too much, too soon.
Furthermore, it’s worth noting that shorting stocks at this scale carries immense risk. If Nvidia and Palantir continue to deliver strong earnings and AI adoption accelerates, losses on Burry’s positions could be substantial. However, his conviction suggests a deep analytical thesis that goes beyond surface-level financial metrics.
Investors and market observers will now watch closely to see whether Burry’s pessimism proves prescient once again—or whether this time, the market’s enthusiasm for AI outpaces the risks he sees on the horizon.
In the meantime, his move has ignited broader conversations about the sustainability of the AI-driven bull market. Are we witnessing the early stages of a bubble? Or is this just a healthy correction in an otherwise transformative technological shift? Regardless of the outcome, Burry’s $1.1 billion gamble has ensured that the debate will remain front and center in financial circles for months to come.
As AI stocks remain under scrutiny, institutional investors may begin to reassess their exposure to tech-heavy portfolios, potentially triggering a rebalancing that could ripple across global markets. Retail investors, too, may take cues from Burry’s contrarian approach, leading to increased volatility in high-profile AI names.
Ultimately, whether Burry’s bet pays off or not, it serves as a stark reminder of the enduring power of skepticism in markets driven by narrative and hype. With valuations stretched and expectations sky-high, the question remains: how much of the AI revolution is already priced in—and how much is still just speculation?