Famed investor Michael Burry, known for his prescient short of the U.S. housing market in 2008, has made waves again — this time placing a substantial wager against the high-flying artificial intelligence (AI) sector. According to recent disclosures, his fund, Scion Asset Management, has taken large put-option positions on two of the most visible names in AI: Palantir Technologies and Nvidia Corporation.
What the Numbers Show
In its latest filing, Scion revealed:
- Puts on approximately 5 million shares of Palantir, with a notional value of about US$912 million.
- Puts on roughly 1 million shares of Nvidia, with a notional value of around US$187 million.
Combined, these positions account for a very large portion of Burry’s publicly disclosed portfolio and signal a strong conviction: that the valuations of these companies are vulnerable.
Why Burry Is Betting This Way
Burry appears to be sending a clear message: the AI-growth narrative may have outpaced fundamentals. Key elements of his thesis include:
- Valuations for Palantir and Nvidia are extremely high, reflecting optimism rather than concrete earnings growth.
- The broader AI theme, while compelling, may face headwinds — higher costs, competitive pressure, or regulatory risk could erode margins.
- By using put options (which benefit from downside moves) instead of traditional short-sales, the move is structured to limit exposure to unlimited risk while signaling a gloomy outlook on the market’s current direction.
Market and Industry Reaction
The announcement of Burry’s positions has stirred investor attention. Palantir’s share price dipped substantially on the news, and Nvidia’s recent sideways–downward movement has spurred commentary about a possible correction. Some industry leaders have publicly derided the move — for example, Palantir’s CEO criticized the idea of shorting a company he views as integral to the AI future, calling the wager “crazy.”
What This Means for Investors
For market watchers, Burry’s move serves as a contrarian signal worth considering. If the AI sector stumbles, his positions could prove prescient; if it continues to accelerate, the risk will be on the shorts. Implications include:
- High-growth, high-valuation stocks may warrant closer scrutiny—particularly those with thin earnings or long pricing tails.
- Investors may revisit assumptions about how quickly ROI from AI will materialize — cost structures, adoption times, and competitive-threat timelines are all in play.
- Defensive or hedging strategies might gain traction, especially for portfolios that have significant exposure to tech/AI themes.
A Watchful Moment
Of course, Burry has made big bets before — and they haven’t always worked out. Timing, as much as conviction, matters. What’s clear is that his move has raised the spotlight: Are we witnessing the calm before a correction, or another leg up in the AI story? The answer will influence portfolio strategy for many in the months ahead.
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