According to Fortune, Michael Burry’s Scion Asset Management placed bearish bets exceeding $1 billion against AI giants Nvidia and Palantir through put options disclosed in regulatory filings for the quarter ending September 30. Burry, famous for predicting the 2008 housing crash, had been warning about an AI bubble through cryptic social media posts, including one showing graphics comparing current tech spending to the dot-com era. Palantir CEO Alex Karp immediately fired back, calling the short positions “batsh-t crazy” during a CNBC interview. The news broke as tech stocks led a market selloff, with the Nasdaq falling 1.5% and Palantir dropping as much as 16% despite beating revenue expectations. Nvidia shares were also down over 2% despite recently becoming the world’s first $5 trillion company. Both stocks remain up dramatically for the year—46% for Nvidia and 157% for Palantir.
Burry Walks the Walk
Here’s the thing about Michael Burry—when he talks, markets listen. And right now he’s not just talking, he’s putting real money behind his AI bubble warnings. The SEC filings show this isn’t some small speculative bet. We’re talking over a billion dollars in put options against two companies that basically represent the entire AI infrastructure story.
What’s really interesting is the timing. Burry had already started positioning against Nvidia back in Q1, and now he’s doubling down while adding Palantir to the hit list. His recent tweet saying “Sometimes, the only winning move is not to play” suddenly makes a lot more sense. He’s basically declaring the entire AI casino rigged.
CEO Pushback and Market Jitters
Alex Karp’s reaction was… passionate, to say the least. The Palantir CEO basically called Burry insane for shorting “the two companies making all the money.” But here’s what Karp might be missing—Burry isn’t betting against their current revenue. He’s betting that their valuations have become completely disconnected from reality.
And the market seems to be agreeing with Burry, at least temporarily. Palantir dropped 16% after earnings despite beating expectations. Why? Because investors wanted more visibility into 2026. When you’re trading at these multiples, “good” isn’t good enough—you need to be perfect.
Bigger Picture Worries
Burry isn’t alone in his skepticism. The charts he shared comparing current capex growth to the dot-com era are genuinely concerning. We’re seeing record spending with questionable profitability across the AI sector. Even the CEOs of Goldman Sachs and Morgan Stanley are warning about potential 10-20% market corrections.
So what does this mean for regular investors? Basically, the smart money is starting to get nervous about how much of this AI boom is built on actual business value versus pure hype. When companies like Nvidia become $5 trillion behemoths based largely on anticipated future demand, any stumble could trigger a massive correction.
What Comes Next
The real question isn’t whether Burry is right about an AI bubble—it’s when it might pop. His previous filings suggested these puts might be hedges, but the latest disclosure dropped that language. That tells me this is a pure directional bet.
History shows Burry tends to be early but ultimately right. The housing bubble took years to collapse after he started betting against it. If he’s correct again, we could be looking at a painful reckoning for anyone overexposed to AI stocks. Then again, maybe this time really is different. But when has that ever been true?
