One of The Short Sellers Who Predicted The 2008 Housing Crisis Now Looks to Be Betting Against AI

Michael Burry's Scion Asset Management disclosed holding significant put options on Nvidia and Palantir at the end of the third quarter, indicating a potential bearish bet against these prominent AI sector stocks. The positions, covering 5 million Palantir and 1 million Nvidia shares, were valued at nearly $1.1 billion, though the duration of these options remains undisclosed. This move by the investor, known for his contrarian calls, signals a potential concern regarding an AI bubble, despite Palantir CEO Alex Karp's dismissal of such shorting and Burry's own subsequent ambiguous social media posts questioning the reliability of 13F reporting.

Analysis

Scion Asset Management, led by Michael Burry, disclosed significant put options on Nvidia (NVDA) and Palantir (PLTR) in its Q3 13F filing, indicating a bearish outlook on these prominent AI sector stocks. These positions represent the right to sell 5 million Palantir shares and 1 million Nvidia shares, valued at nearly $1.1 billion combined at the time of filing. This move suggests a potential bet against the continued growth or current valuations of key AI players.

The duration of these put options remains undisclosed, creating ambiguity regarding whether this is a short-term tactical play or a longer-term conviction bet against an AI bubble. Burry's subsequent social media posts have added to this uncertainty, with messages ranging from questioning the AI frenzy's sustainability to dismissing 13F reporting as "fake news" regarding his "short" status. Palantir CEO Alex Karp vehemently rejected the shorting idea, labeling it "bats--- crazy" and suggesting potential "market manipulation."

Beyond Burry's actions, other market participants are voicing concerns about an AI bubble, citing increasingly circular financing models where companies like Nvidia act as investor, supplier, and customer. High infrastructure costs for AI data centers are also raising questions about the long-term revenue generation capacity of tech giants to justify massive investments. This broader skepticism aligns with the moderately negative sentiment and uncertain tone surrounding the AI sector.

Key Decisions for Investors

• Monitor Scion Asset Management's future 13F filings to confirm the persistence or closure of these put positions, which will clarify Burry's conviction.
• Conduct thorough due diligence on AI sector valuations, particularly for high-growth stocks like NVDA and PLTR, given the "bubble" concerns raised by Burry and other analysts.
• Investors with substantial AI exposure should consider options-based hedging strategies to protect against potential downside volatility, aligning with the implied market uncertainty.