Quick Read
- Michael Burry’s Scion Asset Management disclosed $912 million in puts against Palantir and $187 million against Nvidia.
- Burry’s positions were revealed after both companies posted strong results but saw share price declines.
- Palantir CEO Alex Karp publicly criticized Burry’s bet, calling it ‘crazy’ and suggesting market manipulation.
- Burry’s move coincides with growing debate over whether AI stocks are overvalued and at risk of a bubble.
- The details of Burry’s options, including strike prices and expiration dates, remain undisclosed.
Why Is Michael Burry Betting Against AI Heavyweights?
Michael Burry has a reputation that precedes him. Known for his audacious bet against mortgage-backed securities before the 2008 financial crisis—a story immortalized in Michael Lewis’s book and the Oscar-winning film “The Big Short”—Burry is once again making headlines. This time, his target isn’t the housing market, but two of the biggest names in the artificial intelligence sector: Palantir Technologies and Nvidia.
Burry’s hedge fund, Scion Asset Management, recently disclosed substantial put option positions against these companies. According to regulatory filings released at the end of the third quarter, Scion held puts with a notional value of about $912 million against Palantir and $187 million against Nvidia. Put options are essentially wagers that a stock’s price will fall, meaning Burry stands to gain if the market value of these AI giants drops.
The AI Boom: Bubble or New Normal?
To understand the gravity of Burry’s move, it helps to look at the current landscape. Palantir and Nvidia have been riding a wave of investor enthusiasm for AI and related technologies. Palantir’s stock surged 174% in 2025, buoyed by rising demand for defense and AI software. Nvidia, meanwhile, became the world’s first $5 trillion company this year, driven by its dominance in the chip market and the growing appetite for AI hardware.
Yet, even as both companies beat Wall Street expectations and posted strong guidance, their share prices slid—Palantir by roughly 9% and Nvidia by more than 2% on the day Scion’s positions were revealed. This dip, despite robust performance, highlights a growing unease among investors about the lofty valuations attached to AI-linked stocks. Palantir, for instance, trades at a forward price-earnings ratio of 228, a figure that’s hard to justify by traditional metrics.
Debate is intensifying about whether the AI sector’s rally is sustainable or if it’s morphing into a bubble. Burry himself seemed to add fuel to this fire with a cryptic message on social media: “Sometimes, we see bubbles. Sometimes, there is something to do about it. Sometimes, the only winning move is not to play.”
Alex Karp Fires Back: Inside the CEO’s Response
Palantir CEO Alex Karp did not take Burry’s bets lightly. In an interview with CNBC, Karp called out short sellers, singling out Burry by name. “The two companies he’s shorting are the ones making all the money, which is super weird,” he said. Karp went further, labeling the idea of shorting chips and ontology as “bats— crazy.” For Karp, Burry’s actions amount to a bet against the future of AI itself.
Karp suggested that Burry’s move might not be as straightforward as it seems. “It’s not even clear he’s shorting us. It’s probably just, ‘How do I get my position out and not look like a fool?’” he speculated. The CEO accused short sellers of market manipulation, arguing that Palantir delivered “the best results anyone’s ever seen,” yet still faces skepticism from investors.
When reached for comment, Burry declined to respond to Karp’s remarks or to elaborate on his positions. The details of the put options—such as strike prices and expiration dates—remain undisclosed, leaving room for speculation about Burry’s exact strategy and whether he has since adjusted his portfolio.
Market Signals: Caution Amid Euphoria
Burry’s bearish stance comes at a time when both the S&P 500 and Nasdaq 100 have notched record highs, propelled by optimism about AI. However, there are signs that some investors are beginning to question the durability of this rally. Palantir’s shares, despite strong performance, dipped on concerns over their valuation. Nvidia, after spectacular gains, also saw a pullback.
Burry isn’t new to calling out overheated markets. Earlier this year, Scion liquidated most of its portfolio and bought puts on several U.S.-listed Chinese tech firms, reflecting a broader strategy of caution. The fund also revealed call options on Halliburton and Pfizer—wagers that profit if share prices rise—indicating a selective approach to risk and opportunity.
Scion’s portfolio was trimmed to just eight positions by the end of September, down from 15 at the end of June, with a total value of about $1.38 billion. This streamlining hints at Burry’s efforts to concentrate risk where he sees the most potential for market correction.
What’s Next for Burry, Palantir, and Nvidia?
The story is far from over. It’s unclear whether Burry has profited from the recent declines in Palantir and Nvidia, as regulatory filings reflect only the positions held at the end of September. The volatility of AI stocks means fortunes can shift rapidly, and Burry’s timing—never a detail he shares publicly—remains a subject of speculation among market watchers.
Meanwhile, Alex Karp’s outspoken defense of Palantir underscores the tension between visionary tech leaders and skeptical investors. As Karp put it, “I do think this behavior is egregious and I’m going to be dancing around when it’s proven wrong.”
For retail investors, Burry’s cryptic warnings and bold positions are a reminder that even the most celebrated bull markets are vulnerable to abrupt reversals. The allure of AI may be powerful, but history has shown that unchecked optimism can give way to harsh reality.
Whether Burry’s latest bets will pay off—or if this is simply another chapter in his ongoing critique of market exuberance—remains to be seen. What’s clear is that the debate over the true value of AI stocks is only intensifying, with both sides digging in for what could be a long and unpredictable battle.
Michael Burry’s move to short Palantir and Nvidia challenges the prevailing narrative of unstoppable AI growth, reminding investors that hype and valuation must eventually reconcile. His actions, and the heated response from Palantir’s CEO, signal a pivotal moment for the sector—a test of whether fundamentals or fervor will ultimately prevail.