Imagine the guy who famously called the 2008 housing crash is now wagering against the hottest trend in tech: artificial intelligence. That's the bold reality as Michael Burry steps into the spotlight again with massive bets that could shake up the stock market.
By Jamie Chisholm
Michael Burry is gearing up to challenge the wild enthusiasm surrounding AI investments.
Michael Burry, the hedge fund maestro immortalized in "The Big Short," is signaling the peak of two major stock market darlings—and in doing so, he's creating a bit of a puzzle with his own past statements.
His firm, Scion Asset Management, has snapped up put options on 5 million shares of Palantir (PLTR), a position totaling around $912 million, and put options on 1 million shares of Nvidia (NVDA), worth about $187 million, as revealed in a regulatory filing for the quarter ending September 30.
For those new to investing, put options are financial tools that give the buyer the right—but not the obligation—to sell a stock at a set price (called the strike price) by a certain date (the expiry date). Traders often buy these when they believe the stock's price will drop below that strike level, acting as a hedge or a speculative bet against rising values. In simpler terms, it's like buying insurance on a falling house price, hoping the market goes south.
Burry's 13-F filing with the Securities and Exchange Commission, submitted just ahead of the usual deadline, highlights that these two short positions make up 80% of Scion's portfolio. This means he's placing a hefty wager on a downturn in what has become one of the most hyped investment themes: AI.
His doubts about the AI hype shone through in a fresh social media update late Monday, where he pointed out the industry's "circular capex." If you're not familiar, capex refers to capital expenditures—basically, the money companies spend on big assets like factories or equipment. In this case, Burry is suggesting that AI firms are caught in a loop where they keep investing heavily in infrastructure that might not yield real, sustainable returns, potentially inflating bubbles. Think of it like pouring more and more money into a machine that promises miracles but keeps needing fixes without ever fully delivering.
But here's where it gets controversial... Burry's other holdings for Scion include a $153 million call option bet on Pfizer (PFE), which could profit from rising stock prices, and a $61.5 million call position on Halliburton (HAL). Call options work the opposite of puts: they allow buying at a set price, betting that the stock will go up. So, while he's shorting AI, he's also betting on gains in healthcare and energy sectors.
Nvidia, the maker of key AI chips, and Palantir, a software company specializing in AI-driven data analysis, both reached all-time highs on Monday. Over the past 12 months, Nvidia's shares have surged 48%, while Palantir's have skyrocketed an astonishing 305%. That's the kind of growth that fuels investor frenzy, but it also raises red flags.
And this is the part most people miss... Analysts have been sounding alarms, especially about Palantir, noting its valuation is sky-high. Going into Monday's earnings report, the company traded at a price-to-earnings ratio of over 300, according to FactSet—a metric that compares stock price to earnings per share, and anything that lofty suggests the market might be pricing in unrealistic future profits. For beginners, a high P/E like this often means the stock is expensive relative to its current earnings, similar to paying a premium for a gadget that's all hype and no proven staying power.
Despite beating expectations in their reports, Palantir's shares dipped 4% in pre-market trading on Tuesday, while Nvidia's edged down slightly. It's a sign that the market is reacting, perhaps nervously, to the broader sentiment.
The Scion filing doesn't detail the specifics of the put options, but online observers of options trading have spotted significant activity in out-of-the-money puts—those where the strike price is below the current market value—set to expire later in 2026. This long timeline could indicate Burry's anticipation of a gradual unraveling, much like his prescient wagers against subprime mortgages before the 2007-08 crisis, where he foresaw the cracks that took time to widen into a full collapse. For example, just as he bet against faulty home loans when others were euphoric, he's now positioning against AI exuberance that might fizzle out over months or years.
However, this latest move might clash with Burry's own words from just last week. In a social media post, he hinted at a stock market bubble but advised that "sometimes, the only winning move is not to play"—suggesting investors should stay on the sidelines. Yet, here he is, diving in with gusto on "The Big Short" sequel. Is this a contradiction, or a strategic pivot? Some might argue he's hedging his bets to balance risk, while others could see it as a sign that even skeptics like Burry can't resist the pull of high-stakes action.
Do you side with Burry's caution on AI, or do you think he's missing the boat on innovation? Is his self-contradiction a red flag, or just the mark of a savvy contrarian? And what about the broader bubble talk—could we be in for another market meltdown, or is AI the next big thing? Share your takes in the comments below; I'd love to hear your opinions!
-Jamie Chisholm
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11-04-25 0339ET
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