Michael Burry, the contrarian investor famed for anticipating the 2008 US housing market collapse, has turned his attention to what he believes is the next major bubble, which according to him, is artificial intelligence.
His fund, Scion Asset Management, has revealed bearish positions on Nvidia Corp as well as Palantir Technologies, two of the leading stocks in the AI rally that has propelled US equities to record highs.
$1.1 Billion Short Against AI Leaders
According to Scion’s latest 13F filing with the US Securities and Exchange Commission (SEC), Burry bought put options on 5 million shares of Palantir and 1 million shares of Nvidia, with a combined notional value of about $1.1 billion. Put options generally increase in value when share prices decline.
The disclosure, made public on Tuesday (US time), rattled markets. Nvidia’s stock fell nearly 4 per cent, while Palantir plunged over 8 per cent, even after the latter had raised its full-year earnings guidance and reported stronger-than-expected quarterly results, according to Investopedia.
AI Boom Faces Burry’s Scepticism
Nvidia, which recently hit a $5 trillion market capitalisation, has been the face of the global AI surge. Palantir, meanwhile, has surged 175 per cent in 2025 and trades at over 80 times forward price-to-sales, making it one of the most expensive stocks on the S&P 500.
Burry’s decision to short these stocks near their peaks echoes his timing during the subprime mortgage crisis – the trade that inspired The Big Short.
‘Sometimes, We See Bubbles’
Last week, Burry appeared to hint at his views on social media platform X (formerly Twitter), sharing an image of actor Christian Bale portraying him in The Big Short with the caption, “Sometimes, we see bubbles.”
He later posted charts showing slowing cloud growth at Amazon, Alphabet and Microsoft, suggesting that AI-driven spending may be unsustainable – drawing parallels to the excesses of the dot-com era.
After news of his filing broke, Burry joked, “Fake news! I am not 5’6” and not that there’s anything wrong with that,” while also criticising “journalists reporting on 13Fs,” implying that such filings do not always reveal his complete investment strategy.
Palantir CEO Responds
Palantir CEO Alex Karp pushed back strongly in a CNBC interview, calling the idea of shorting Palantir and Nvidia “bats— crazy.”
“We are two of the only companies making all the money in AI,” Karp said, accusing short sellers of engaging in “market manipulation.”
Despite his response, Palantir shares have lost roughly $51 billion in market value since Burry’s position became public, according to Michael Burry Stock Tracker.
Global Markets React
The disclosure triggered broader market volatility, with the AI selloff spilling into global equities. According to Investopedia, Japan’s Nikkei 225 dropped 2.5 per cent, South Korea’s KOSPI fell 2.85 per cent, and Europe’s STOXX 600 declined 0.46 per cent before recovering. Bitcoin also briefly slipped below $100,000 before rebounding to $101,000.
Not Burry’s First AI Short
This is not Burry’s first bearish move against Nvidia. Earlier in the year, Scion had liquidated most of its equity portfolio while buying puts on Nvidia and several Chinese tech stocks – a trade that paid off briefly when Nvidia fell 20 per cent in the first quarter before rebounding.
At the time, Scion noted that the puts could “serve to hedge long positions,” though such clarification was absent from the latest filing, leaving investors uncertain whether this represents a pure short or a strategic hedge.
