Michael Burry is betting that AI is more likely a bubble than a revolutionary movement. His fund, Scion Asset Management, revealed November 3 that it invested in the fall of Palantir and Nvidia’s stocks.
Burry made a fortune when he predicted the 2008 financial crisis and bet against the U.S. housing market collapse. His instinct led to the creation of “The Big Short” book and movie, and carved out his position as an iconic investor.
Now, he’s taking a controversial stand on the AI boom. On October 30, Burry posted on X, “Sometimes, we see bubbles. Sometimes, there is something to do about it. Sometimes, the only winning move is not to play.” His words stood alongside a still from “The Big Short.”
Four days later, Scion Asset Management disclosed that it bought around $912 million in put options on Palantir and $187.6 million on Nvidia.
Tech and AI stocks have been top of the market recently. But On November 4 Nasdaq reported its worst day since August, falling 2.04 percent, while the S&P 500 sank 1.17 percent. Both indexes encapsulate majority tech companies.
Burry’s move is catching eyes amid growing concerns from investors that the market is overly concentrated on a few large companies. But his calls haven’t always been right. In 2023 he posted on X, “Sell,” and then two months later, “I was wrong to say sell.”
Palantir’s shares are up 152 percent this year, but on November 4 they fell 7.95 percent. Nvidia’s tumbled 3.96 percent, though its shares are still up 48 percent this year.
Burry’s public position could have an impact, said Angelo Zino, a tech analyst at CFRA Research.
“Despite the great results, when you coincide that with the comments that Michael burry made and everybody already talking about concerns about an AI bubble, I think the combination of those factors really helped drive a pullback in the shares, the broader tech index and as a result the broader markets,” Zino said. “We’re not overly concerned about the pullback, but I would say it’s one of those situations where you’ve got to keep an eye on it.”
On the other hand, Palantir CEO Alex Karp called him “crazy,” and his behavior “crazy motivating.”
“When I hear short sellers attacking what I believe is clearly the most important software company in America, therefore in the world, in terms of our impact,… it just is super triggering,” Karp said in a CNBC interview. “Every time they short us, we are just like tripling down on getting the better numbers, in part honestly, to make them poorer.”
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