Michael Burry, the legendary investor behind “The Big Short,” has once again taken a contrarian stance—this time targeting the artificial intelligence (AI) sector. In newly released regulatory filings, his firm, Scion Asset Management, revealed large bearish positions against two of the market’s biggest AI winners: Nvidia and Palantir.
According to the third-quarter 13F filings, Scion holds put options tied to one million shares of Nvidia and five million shares of Palantir. These options, which increase in value as stock prices fall, suggest Burry is bracing for a potential pullback in the high-flying AI trade that has dominated markets for the past two years.
Both companies have seen staggering gains. Nvidia’s stock has surged roughly 55% year-to-date, following explosive rallies of 170% in 2024 and 240% in 2023. The company even crossed a historic milestone last week, becoming the first firm to reach a $5 trillion market capitalization—cementing its dominance in AI chipmaking. Palantir, meanwhile, has skyrocketed more than 170% this year, driven by enthusiasm over its AI-driven software for government and enterprise clients.
Yet, despite the strong performance and record valuations, Burry appears skeptical. In recent social media posts, he hinted that the current AI euphoria bears similarities to the late-1990s dot-com bubble. He highlighted charts showing rapid capital expenditure growth by major tech firms like Amazon, Alphabet, and Microsoft—levels not seen since the tech bubble of 1999–2000. He also pointed to a slowdown in cloud segment growth among these companies, suggesting that the underlying demand for AI infrastructure may not justify the soaring stock prices.
Burry’s cautionary tone has extended to broader market concerns. He recently reshaped his online profile to “Cassandra Unchained,” referencing the mythological figure who foresaw disaster but was ignored. The move echoes his role in 2008, when his warnings about the housing bubble went largely unheeded until the financial crisis unfolded.
While Burry’s AI skepticism has attracted significant attention, not everyone agrees with his outlook. Palantir CEO Alex Karp publicly dismissed the notion that companies like his should be targets for short-sellers, calling it “crazy” given the firm’s contributions to advanced analytics and national defense. Still, even Palantir’s latest strong quarterly results and raised revenue outlook failed to stop its stock from dropping more than 10% after the announcement, as investors questioned its lofty valuation. Nvidia’s shares also dipped nearly 3% following the disclosure of Burry’s puts.
Investor unease around the AI sector has been growing, particularly after reports of “circular financing” arrangements among major AI firms, including Nvidia and OpenAI, raised concerns that parts of the boom may be artificially sustained.
It remains unclear whether Burry’s put options represent outright short bets or form part of a hedging strategy against other positions. However, his timing—and history of accurately predicting bubbles—has reignited debate over whether the AI-driven rally can continue unchecked.
For now, the market’s faith in artificial intelligence remains strong. But with one of Wall Street’s most famous skeptics sounding the alarm, investors are being reminded that even revolutionary technologies can trade ahead of their fundamentals.