The Oracle’s Ominous Bet: Inside Michael Burry’s Billion-Dollar War on the AI Boom
The Billion-Dollar Bet Against AI: Inside Michael Burry's Latest Market Move
WASHINGTON – Michael Burry is at it again. The investor who became a legend for predicting the 2008 crash has now set his sights on a new target: the white-hot artificial intelligence sector. A recent filing from his firm, Scion Asset Management, shows he’s placed a massive bet against two of AI’s biggest names, Palantir and Nvidia. This isn't just a simple trade. It's a loud, public statement that the trillion-dollar AI boom is a bubble waiting to pop.
The details are staggering. Burry’s firm took bearish "put option" positions with a total value north of $1.1 billion, making up the vast majority of his reported portfolio. The primary target was Palantir, the data analytics company, with a bet equivalent to 5 million shares. A smaller, but still hefty, position was taken against Nvidia, the company whose chips power the AI revolution. The market didn't wait to ask questions. The news alone sent Palantir shares down nearly 7% before the market opened, while Nvidia dipped over 2%. When Michael Burry talks, even through a regulatory filing, Wall Street still listens.
As of writing, Palantir shares fell 6.76% in pre‑market trading to $193.18 amid attention, while Nvidia slipped roughly 2.03% pre‑market alongside the same theme of AI bubble skepticism taking hold in headlines.
Reading Between the Lines of the Bet
Before the opening bell even rang, analysts were already picking apart what this move really means. They were quick to point out a key detail: the billion-dollar figure is the theoretical value of the shares involved, not the actual cash Burry put down. We don't know the specific strike prices or expiration dates he used, so it's impossible to say exactly how much he's risking or how long he thinks this will take to play out. This could be a long-term conviction or a sharp, short-term bet on a market pullback.
But the ambiguity itself is part of the message. By staking so much of his firm's public portfolio on this single, pessimistic idea, Burry is shouting his conviction from the rooftops. It’s a deliberate callback to his "Big Short" play—a move designed to shake the unshakable confidence that has come to define the AI trade. This isn't a quiet insurance policy; it's a direct challenge to the market's most celebrated winners.
The Puzzle of a Perfect Quarter
What makes Burry's timing so fascinating is that it came right on the heels of what looked like a flawless earnings report from Palantir. The company posted soaring revenue, with its U.S. commercial business more than doubling. The CEO triumphantly called demand a "juggernaut" and raised their financial outlook yet again.
On paper, it was a report that should have crushed anyone betting against the stock. Instead, the share price fell. This is the heart of Burry's gamble. He isn't arguing that Palantir is a bad company; he's betting that it's a fantastically overpriced stock. With a price-to-earnings ratio in the hundreds, the market had already priced in a future of perfect, world-changing success. The stock had climbed so high that even a spectacular quarter wasn't enough to push it further. That moment of peak optimism was the fragile opening Burry needed.
Why Palantir is the Perfect Target
For traders, the real story isn't the drama, but the mechanics of the trade itself. The view from the inside is that Palantir has become the perfect example of a stock that has sprinted far ahead of its actual fundamentals.
The genius of the move is in its timing. By striking right after a blowout earnings report, Burry created maximum psychological impact. When a company reports its best numbers ever and the stock still stumbles, it’s a classic sign that everyone who wanted to buy, already has. The valuation has hit a wall. That gives investors an excuse to cash in their profits and plants a seed of doubt.
At its core, this is a classic bet that the company's story has gotten too far ahead of its financial reality. The trade doesn't require Palantir to fail. It just requires the market to see it as a very strong data company—which it is—rather than an invincible AI deity. Don't forget, despite its commercial growth, over half of Palantir's revenue still comes from government contracts. That reliance on public spending, which can be unpredictable, is a vulnerability its sky-high stock price completely ignores. Burry is betting that when the market remembers this, the stock's valuation will come crashing back to earth.
And including Nvidia in the bet broadens the attack. It turns a critique of one company into a warning about the entire AI sector. It also works as a strategic hedge; if the whole tech market corrects, the Nvidia bet pays off even if Palantir's specific story doesn't immediately unravel.
In the end, Burry is signaling that he believes a major correction is coming. He's betting that the laws of financial gravity will soon reassert themselves, compressing the insane valuations that have defined the AI gold rush. The clock, in his view, is now ticking.
NOT INVESTMENT ADVICE