Why Michael Burry is Trending and What it Means for Palantir, Nvidia

Whenever Michael Burry makes a move, markets sit up. The investor who predicted the 2008 housing crash, and inspired the Hollywood movie The Big Short, is back in the spotlight. This time, not for real estate, but for his massive bet against the AI frenzy.

Recent filings show that Michael Burry’s fund, Scion Asset Management, has taken over $1.1 billion worth of put options, essentially wagers that share prices will fall, against two of the hottest AI names: Palantir Technologies (PLTR) and Nvidia Corp.

The moment that news surfaced, Palantir stock slid nearly 8% and Nvidia stock also fell around 4% as per Google Finance. Why such buzz? Because every time Burry bets big, people remember 2008. He saw the crash before anyone else. 

Now he is hinting that another bubble, this time in AI stocks, might be forming. So, is his “Big Short 2.0” a warning to investors, or just another contrarian call? Let’s unpack what’s behind this trend and what it could mean for one of AI’s most talked-about companies.

Who Is Michael Burry and Why His Bets Matter?

Michael Burry built his reputation by swimming against the tide. In 2005-2007, while most of Wall Street was euphoric about housing, he shorted subprime mortgages, a move that earned him billions when the market collapsed.

Today, he runs Scion Asset Management, a relatively small but closely watched hedge fund. Every quarter, Scion files a 13F report with the SEC showing its stock positions. Those filings have become must-reads because of Burry’s track record.

In the latest one, Scion disclosed put options worth about $912 million on Palantir and $187 million on Nvidia (NVDA), effectively betting those stocks will decline. To most traders, that was a signal: if the man who predicted the housing crash is shorting AI, maybe valuations have gone too far.

The Palantir Story — From AI Favorite to Burry’s Short Target

Palantir Technologies started as a government-focused data-analytics firm, best known for defense and intelligence software. In recent years, it has pivoted toward commercial AI tools that help companies make decisions using massive datasets. That shift, and the broader boom in AI investments, turned Palantir (PLTR) stock into a retail favorite. 

Shares climbed sharply through 2023-24 as Palantir announced deals with energy firms, healthcare providers, and global governments. But the growth narrative also drove valuations sky-high. Palantir now trades at revenue multiples far above most software peers. And that’s exactly what might have caught Burry’s eye.

After Scion’s short position became public, Palantir stock dropped nearly 8%, and analysts began questioning whether the AI premium had stretched too far.

Why Michael Burry Might Be Betting Against Palantir and Nvidia

While Michael Burry hasn’t publicly explained his reasoning, his short positions against both Palantir and Nvidia point to a broader concern about overheating in AI-driven stocks.

• Valuation worries: Both stocks are trading at rich valuations. Nvidia has a forward P/E of about 33.6×, reflecting very high growth expectations. Palantir looks even more expensive, with a forward P/E near 256×, compared to the software industry’s 45–50× average.
• AI hype: Much of the rally in both companies is driven by optimism around artificial intelligence. Nvidia’s AI chip dominance and Palantir’s AI software tech positioning have fueled speculative enthusiasm across markets.
• Profitability concerns: Palantir remains only modestly profitable, with margins still reliant on government contracts. Nvidia, while highly profitable today, could see margins squeezed if AI chip demand normalizes or competitors like AMD and custom AI chips gain share.
• Macro headwinds: With US interest rates staying higher for longer, expensive growth stocks are more vulnerable to re-rating. Any slowdown in enterprise or AI spending could quickly weigh on both names.

Palantir CEO blasts Burry as ‘bats--- crazy’

Palantir CEO Alex Karp fired back at Michael Burry, after filings revealed the Big Short investor had bet against Palantir and Nvidia last quarter. Speaking to CNBC, Karp said, “The two companies he’s shorting are the ones making all the money, which is super weird. The idea that chips and ontology are what you want to short is just crazy.”

Karp further said, “He’s (Burry) actually putting a short on AI. ... It was us and Nvidia.”.

What to Watch Next

• Scion’s next 13F filing: Investors will be watching whether Burry increases, trims, or exits his short positions against Palantir and Nvidia in the next quarterly disclosure.
• Upcoming earnings reports: Palantir’s next earnings will reveal if its AI demand and commercial margins are improving, while Nvidia’s results will show whether AI chip sales can keep growing at the same pace.
• AI spending trends: Any slowdown in enterprise AI budgets or cloud capex could hit both companies’ growth outlooks.
• Competition risks: Rising pressure from rivals, like AMD in chips and Snowflake or C3.ai in analytics, could challenge their dominance.
• Macro factors: Sticky inflation and high US interest rates could weigh on valuations for all high-growth tech names, especially AI-heavy ones like Palantir and Nvidia.

The Bottom Line for Palantir & Nvidia Stock Investors

The Michael Burry Big Short trend shows how when one of the most famous contrarian investors bets big against the AI narrative, it forces everyone else to pause and re-evaluate the hype. Whether he’s right again or just early, the takeaway for investors is simple: don’t chase excitement blindly. The best trades in history often came from questioning consensus, and that’s exactly what Burry is doing.

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