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Title: Michael Burry's AI Puts: Genius Move or Burning Money?
Michael Burry, the man who called the 2008 housing crisis, is making waves again. This time, it's with massive put options against two tech darlings: Palantir Technologies (PLTR) and Nvidia (NVDA). A recent regulatory filing reveals Scion Asset Management's bearish bets – $912.1 million against Palantir and $186.58 million against Nvidia, according to Whale Wisdom. The question is: Is Burry onto something, or is he fighting the tide?
Burry's return to X (formerly Twitter) adds another layer to the story. His post, referencing an AI bubble and Star Wars ("These aren't the charts you are looking for"), suggests a deep skepticism about the current AI hype. He even updated his profile to "Cassandra Unchained," a nod to the mythological figure doomed to be right but never believed. Is he seeing a bubble that others are missing, or is he simply being a contrarian for the sake of it?
Decoding the Data: A Closer Look at Burry's Bets
Let's break down the numbers. Burry's puts represent a significant wager against both Palantir and Nvidia. Palantir, trading at all-time highs, has seen its stock price surge on AI-related optimism. Nvidia, a key player in AI chip manufacturing, has experienced an even more meteoric rise, with shares up over 1,200% since the start of 2023. These gains have propelled its market cap to dizzying heights.
Burry's charts, comparing cloud segment growth from 2018-2022 to the present, and illustrating the interconnected web of AI deals (Nvidia, OpenAI, Oracle), paint a picture of potentially unsustainable growth and interconnected risk. He also highlights AI capex matching the tech spending of the 1999-2000 tech bubble. (Note the implicit parallel to the dot-com era.)
However, context matters. While Burry is betting against these companies, his fund also made other moves. Scion added 50,000 shares of Lululemon Athletica, opened a 125,000 share position in Molina Healthcare, and a 480,000 share position in SLM Corp. He also purchased 2.5 million calls on Halliburton and six million calls on Pfizer. This suggests a broader portfolio strategy, not simply a singular focus on shorting AI.
The "Mother of All Crashes" Revisited?
Burry's history is crucial here. He famously predicted the housing market crash and has a track record of contrarian bets. In the summer of 2021, he warned of the "greatest speculative bubble of all time in all things," cautioning against meme stocks and cryptocurrencies. Elon Musk even called him a "broken clock" at the time.
So, is this another "broken clock" moment, or is Burry genuinely seeing something others don't? The key difference this time, perhaps, is the scale of the AI boom. The potential impact of AI is undeniable, but the current valuations of companies like Nvidia and Palantir are pricing in a level of future success that might be unrealistic. 'Big Short' Michael Burry Is Back With a Bubble Warning After 2 Years
I've looked at hundreds of these filings, and the sheer size of the Palantir put is unusual. Is it a hedge against other long positions, or a genuine conviction that the stock is overvalued? The size of the bet suggests the latter.
The Data Doesn't Lie: It Just Needs Interpreting
Burry's AI puts are a high-stakes gamble. He's betting against two companies that are currently riding the crest of the AI wave. Whether he's right or wrong remains to be seen, but his track record and the underlying data suggest that a healthy dose of skepticism towards the AI hype is warranted. Ultimately, time will tell whether Burry's bearish stance is a stroke of genius or an expensive miscalculation.
