Michael Burry’s Big Bet Against AI Stocks
Michael Burry, the hedge fund manager famous for predicting the 2008 financial crisis and featured in The Big Short, has placed massive bets against two of the most popular AI stocks — Palantir and Nvidia.
According to regulatory filings, Burry’s fund Scion Asset Management bought put options covering 5 million shares of Palantir worth about $912 million and 1 million shares of Nvidia worth $187 million.
What Are Put Options?
Put options give investors the right to sell a stock at a fixed price before a certain date. Traders usually buy puts when they expect the stock price to fall. This means Burry is betting that AI stock prices will drop soon.
Key Highlights from Burry’s Portfolio
- Short positions in Palantir and Nvidia make up about 80% of Scion’s total portfolio.
- He also holds a $153 million call option on Pfizer and a $61.5 million call on Halliburton.
- These moves suggest a strategic shift toward more defensive and value-oriented sectors.
Why Is Michael Burry Betting Against AI Stocks?
Burry believes that AI valuations have become too high and disconnected from fundamentals. Nvidia recently crossed a $5 trillion market cap, while Palantir’s stock price has also soared sharply this year.
He has warned that excessive optimism, rapid tech spending, and speculative trading could lead to a market correction in the AI sector.
Generative AI and Market Froth
Analysts say that the ongoing AI investment boom has led to “circular” deals where tech companies invest in each other’s AI startups — a trend that could inflate valuations further without real growth.
According to Burry, such patterns resemble past market bubbles and could end badly if investor sentiment changes.
Tactical Risk Management
Instead of short selling stocks directly, Burry’s use of put options limits his downside risk to the option premium he paid. However, if AI stocks fall sharply, his potential gains could be very high.
Investor Takeaway
Michael Burry’s move shows that even during a strong market, smart investors remain cautious. His bets suggest a belief that the AI stock rally may be overextended and due for a pullback.
While the market continues to reward growth and AI innovation, Burry’s contrarian stance is a reminder that valuation and fundamentals still matter.
