Michael Burry takes on Artificial Intelligence: the “Big Short” against Nvidia and Palantir

The man who foresaw the subprime mortgage crash bets over a billion dollars against the giants of AI. Visionary or reckless?

Michael Burry is making headlines again. The investor made famous by The Big Short - who predicted the 2007 subprime mortgage collapse - has wagered $1.1 billion against two of the hottest stocks on the market: Nvidia and Palantir Technologies, the flagbearers of the artificial intelligence boom.

According to filings with the SEC, Burry’s fund, Scion Asset Management, has purchased put options - which profit when prices fall - on one million shares of Nvidia (worth about $187 million) and five million shares of Palantir (about $912 million). It’s the latest contrarian move from the doctor-turned-investor, known for swimming against the tide when market optimism reaches its peak.

On X, Burry issued a cryptic warning: “Sometimes we see bubbles. Sometimes there’s something to do. Sometimes the only winning move is not to play”. His words coincided with growing anxiety on Wall Street, as record-high valuations in the AI sector sparked fears of overheating. The VIX volatility index, known as the “fear gauge,” climbed to its highest level in weeks.

Nvidia, recently becoming the first company to reach a $5 trillion market cap, fell 4%, while Palantir - up more than 360% over the past year - plunged 8%. Yet Palantir’s CEO Alex Karp dismissed Burry’s bearish bet as “crazy,” telling CNBC: “He’s shorting the very thing that’s making all the money. He’s shorting artificial intelligence itself.”

Meanwhile, Wall Street heavyweights Ted Pick (Morgan Stanley) and David Solomon (Goldman Sachs) have warned of a potential 10–15% market correction, suggesting that the AI-fueled rally might soon run out of steam. The current excitement around generative AI echoes the dot-com bubble of the late 1990s - but with one key difference: today’s leaders, such as Nvidia, Microsoft, and Alphabet, are highly profitable and largely self-financed, unlike the debt-fueled startups of that era.

The sell-off has rippled far beyond Wall Street: Tokyo’s Nikkei 225 and South Korea’s KOSPI both dropped more than 2.5%, and Bitcoin briefly slipped below the $100,000 mark before rebounding.

For Michael Burry, this could be another defining “Big Short” moment - or a billion-dollar misread of the AI revolution. History will tell whether the man who once saw the storm before everyone else is again ahead of his time - or simply too early.

Andrea Pelucchi