According to Fortune, Michael Burry’s Scion Asset Management disclosed over $1 billion in put options against Nvidia and Palantir in regulatory filings for the quarter ending September 30. Burry, famous for predicting the 2008 housing collapse, had been warning about AI bubbles through cryptic social media posts showing parallels between current tech spending and the dot-com era. Palantir CEO Alex Karp immediately fired back, calling the short positions “batsh-t crazy” since both companies are “the ones making all the money.” The news comes as tech stocks led market declines, with Palantir dropping 16% despite beating revenue expectations and Nvidia falling over 2% after recently becoming the world’s first $5 trillion company. Both Goldman Sachs and Morgan Stanley CEOs separately warned of potential 10-20% market corrections in the next 12-24 months.
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<h2 id="burry-ai-bubble-warning”>The Big Short investor sees another bubble
Here’s the thing about Michael Burry – when he makes big bets, people pay attention. And he’s not being subtle about his concerns. His recent social media posts have been practically screaming “bubble,” showing graphics that compare today’s AI spending frenzy to the dot-com era. He even quoted that classic line from WarGames: “Sometimes, the only winning move is not to play.”
What makes this particularly interesting is that Burry already had a smaller position against Nvidia back in Q1, and he liquidated nearly his entire equity portfolio. Now he’s doubling down with what appears to be his biggest bearish bet since the housing crisis. The latest SEC filings don’t include the hedging disclaimer that previous ones did, which suggests this might be a pure directional bet rather than portfolio protection.
<h2 id="palantir-nvidia-reaction”>When the shorts come for the AI darlings
Palantir’s CEO didn’t hold back in his response, and honestly, he has a point. Both companies are absolutely printing money right now. Nvidia’s chips are powering the entire AI revolution, and Palantir’s government contracts plus enterprise AI platforms are generating serious revenue. So why would anyone bet against them?
But that’s exactly what makes Burry’s move so fascinating. He’s not arguing that these companies aren’t successful – he’s betting that their valuations have become completely detached from reality. We’re talking about a semiconductor company that hit $5 trillion in market cap and a data analytics firm whose stock is up 157% this year. When numbers get that crazy, even the most successful companies can become overvalued.
The fundamental disconnect in AI valuations
Here’s where Burry might have a case. Look at what happened with Palantir’s earnings – they beat revenue expectations, but the stock still tanked 16%. Why? Because the market was disappointed about their 2026 visibility. That tells you everything about the AI hype cycle we’re in.
Companies are spending record amounts on AI infrastructure, but where’s the profitability? Nvidia is making money hand over fist selling the picks and shovels, but many companies buying those chips aren’t seeing returns yet. It’s the classic “gold rush” scenario where the tool sellers get rich while many miners go broke. Burry’s recent post highlighting how much of the AI boom depends on just two companies (Nvidia and OpenAI) suggests he sees this as a fragile ecosystem.
The bigger picture everyone’s missing
What’s really concerning is that Burry isn’t alone in his pessimism. When the CEOs of Goldman Sachs and Morgan Stanley are both warning about 10-20% market corrections, you know something’s brewing. They’re not talking about a crash caused by some economic catastrophe either – they’re predicting a simple, healthy correction after years of inflated valuations.
So is Burry right again? Honestly, timing these things is nearly impossible. But his track record means we should at least pay attention. The AI revolution is real, but that doesn’t mean every company riding the wave deserves its current valuation. Sometimes the most obvious success stories become the most dangerous investments. And when the guy who saw the housing collapse coming starts betting against the market’s biggest winners, it’s worth asking some hard questions about what we’re all missing.
