Michael Burry attends the screening of The Big Short on November 23, 2015, in New York City. Photo by Astrid Stawiarz/Getty Images
As noted by CNN
Michael Burry, the well-known investor who rose to fame through the film The Big Short, is again drawing the attention of global markets: his views on artificial intelligence remind of a possible bubble rather than a real revolution in technology.
The Scion Asset Management fund said on Monday it had purchased put options – bets on a drop in stock prices – on two leaders of the AI ecosystem: Nvidia and Palantir. According to data filed with the Securities and Exchange Commission, the fund bought about $187.6 million in Nvidia put options and about $912 million in Palantir puts.
Burry is known for predicting the collapse of the US housing market in 2008, and for his story being told in Michael Lewis’s book and the film adaptation of The Big Short (2010–2015) starring Christian Bale.
AI Bubble and Market Outlook
Now Burry is questioning the hottest AI-market stocks amid growing concerns about a possible bubble. Tech and AI companies have supported the market recently, and the S&P 500 is increasingly concentrated in tech-sector companies and is trading at historically high levels.
Moreover, the AI deal flow is drawing attention through the corridors of Wall Street: many tech companies are intertwined in a sprawling network of deals, raising questions about the sustainability of future earnings growth and costs.
The Nasdaq Composite’s tech sector fell 2.04% on Tuesday, marking its worst day since August, while the S&P 500 fell 1.17%.
Burry drew investor attention on Thursday by posting on X (formerly Twitter) for the first time since 2023. In the post, he shared a photo of Christian Bale portraying him in The Big Short, and noted: “Sometimes we see bubbles. Sometimes there is something to do about it. Sometimes the only winning move is not to play.”
Four days later, Burry’s fund disclosed its pessimistic positions on Nvidia and Palantir in the third-quarter filings. The respective reports were submitted to the SEC, but Scion Asset Management did not respond to requests for comment.
Angelo Zino, CFRA Research’s tech analyst, expressed the view that the pullback in tech stocks was forced after a prolonged rally, and in his words, Burry’s statements could amplify concerns.
Burry himself has repeatedly addressed public comments about the market after The Big Short. While not always right, his words carry weight on Wall Street.
Burry’s return to social media comes amid investor concerns about inflated valuations, market concentration in a few large companies, and rising expectations for investments. For instance, Palantir beat analysts’ expectations on Monday, but this did not manage to impress traders after a string of strong financial results. On Tuesday, the company’s shares fell 7.95% – the worst day since August.
Palantir was a leader among S&P 500 stocks in 2024 and ranks among the top five for the year. The company’s valuation again appeared “unreasonable” or “somewhat inflated” to some investors, according to CFRA.
Despite strong results, combined with Michael Burry’s remarks and general concerns about an AI bubble, I believe that the combination of these factors truly helped pull back the shares, the broader tech index, and the markets overall.
We’re not overly concerned about the pullback, but I’ll say this is one of those cases where you need to pay attention to the situation.
On Tuesday, Nvidia’s shares fell another 3.96%, though they remained roughly 48% above the year-ago level. Palantir’s CEO, Alex Karp, told CNBC that investors who are betting against the company – including Burry – are “crazy.”
When I hear short-sellers attack what I consider the unquestionably most important software company in America, indeed in the world, in terms of our impact, it’s incredibly triggering.
“This is incredibly motivating,” added Karp. “Every time they hold a short against us, we simply double our efforts to deliver better results, partly to make them weaker.”
Despite the volatility and growing attention to AI, Burry remains a cautionary voice, reminding that even the most ambitious technologies require careful analysis and a prudent approach to risk.
The story of the two bets on Nvidia and Palantir adds a new dimension to the discussion about the future of artificial intelligence: will it be a driver of rapid growth, or will it turn into yet another financial bubble? Whatever the outcome, Burry’s contribution to the conversation about technology and the market remains significant.
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