Burry, who became a household name after predicting the 2008 crash and inspiring the film The Big Short, is now wagering that the AI boom will end the same way — in a bust.
Wall Street was thrown into turmoil after it emerged investor Michael Burry has bet heavily against two of the world’s biggest AI firms.
Burry, who became a household name after predicting the 2008 crash and inspiring the film The Big Short, is now wagering that the AI boom will end the same way — in a bust.
Nvidia, the planet’s most valuable company, plunged 2.5 percent this morning as $34 billion was wiped off its value. The Nasdaq and S&P 500 were also down.
Burry’s move sent shockwaves through markets and sparked a furious reaction from Palantir boss Alex Karp, who branded the short sellers ‘bat**** crazy’ live on CNBC on Tuesday morning.
Filings show Burry’s hedge fund, Scion Asset Management, disclosed put options worth about $900million against Palantir and $187million against Nvidia. A put option is a financial bet that pays off if a company’s share price falls.
‘The two companies he’s shorting are the ones making all the money, which is super weird,’ Karp raged on CNBC.
‘The idea that chips and ontology is what you want to short is bat**** crazy,’ he added, referring to Palantir’s data ‘brain’ that links and interprets vast troves of information for its AI systems.
He accused short sellers of manipulating the market and said he would be ‘dancing around’ when their bets fail.
Palantir’s stock was down sharply this morning and after trying to recover was heading down again
Palantir shares tumbled almost 9 percent on Tuesday morning, even though the company smashed Wall Street forecasts with a 63 percent surge in quarterly revenue.
Nvidia fell 2.5 percent, a move that wiped $34billion from its value. Its stock is still up more than 50 percent this year and it recently became the first company valued at more than $5trillion.
Burry — the investor immortalized in The Big Short for predicting the 2008 housing crash — has kept quiet since the filing.
Last week he hinted at caution in a cryptic post on X, writing: ‘Sometimes, we see bubbles. Sometimes, there is something to do about it. Sometimes, the only winning move is not to play.’
His warning appeared prophetic as investors dumped AI-linked names and broader markets slid.
‘We have seen this movie before,’ one analyst said in reference to Burry’s bet and his involvement in The Big Short.
The Dow Jones dropped 410 points, the S&P 500 lost 1 percent, and the Nasdaq sank 1.6 percent.
Analysts said the sell-off reflected mounting fears that AI stocks have run too far and too fast.
‘Our biggest complaint about US equities is the extremely disjointed state of breadth, whereby a handful of tech mega-caps have masked red flags beneath the surface,’ said Adam Crisafulli of Vital Knowledge.
Goldman Sachs chief David Solomon also warned of a potential 10 to 20 percent market correction within the next year.
The comments added to a growing sense that even Wall Street’s biggest bulls are starting to sweat.
Who is Michael Burry and his role in The Big Short?
Michael Burry built his fortune — and his legend — by spotting a financial apocalypse before anyone else.
A former neurologist turned hedge-fund manager, he bet against the US housing market in 2007, correctly predicting that sub-prime mortgages would collapse.
His trade made billions for his investors and was immortalized in The Big Short — first a best-selling book by Michael Lewis and later a Hollywood film.
It starred Christian Bale as Burry, Steve Carell as fund boss Mark Baum (based on real-life investor Steve Eisman), Ryan Gosling as slick trader Jared Vennett (based on Greg Lippmann), and Brad Pitt as reclusive financier Ben Rickert (based on Ben Hockett). Eisman also recently warned about the stock market.
Since then, Burry has made a career of warning about bubbles — from bitcoin and meme stocks to post-pandemic tech rallies.
He famously sold almost all his holdings in 2022 before markets plunged, then returned to buy when prices hit bottom.
This latest move — shorting Nvidia and Palantir — echoes his original contrarian streak.
Both firms are at the center of the artificial-intelligence boom that has sent valuations to eye-watering levels.
Palantir trades at more than two hundred times forward earnings, while Nvidia’s market cap briefly topped three trillion dollars.
To Burry, those numbers may look just as dangerous as mortgage bonds once did.
And if he’s right again, his 2008-style warning could mean another painful reckoning for Wall Street.
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