**Michael Burry Bets Big Against AI Giants Nvidia and Palantir**
Michael Burry, the investor best known for predicting the 2008 financial crisis, has just made his largest wager yet against the booming artificial intelligence (AI) sector. In the third quarter of 2025, Burry’s Scion Asset Management purchased $1.1 billion in put options betting against Nvidia and Palantir—two of the most prominent AI-focused tech stocks.
**Massive Put Option Positions**
Burry’s largest bet targets Palantir, with $912 million placed on put options. The remaining $186.6 million is a bet against Nvidia. Put options allow investors to profit if the underlying stock price falls, a strategy Burry famously used before the housing bubble burst in 2008. He also has a track record of shorting overvalued tech stocks prior to the dot-com crash.
**Why Target Nvidia and Palantir?**
The reasoning comes down to valuation. Palantir trades at a staggering 417 price-to-earnings (P/E) ratio and a price-to-sales ratio of 116, despite generating $3.8 billion in trailing revenue against a $483 billion market cap. Nvidia, while less extreme, still carries a P/E of 53 and price-to-sales of 28.
Burry’s strategy is rooted in these stretched valuations, which have already caught the eye of market analysts. Both stocks have declined since his positions were made public, and some analysts have warned of potential 50% corrections ahead.
**AI Stocks Near U.S. GDP Levels**
The context of Burry’s bets is the unprecedented surge in AI stocks. Eight of America’s ten most valuable companies now focus on AI, with a combined market capitalization of $23 trillion—closing in on the total U.S. GDP of $29 trillion. Nvidia notably recently hit a $5 trillion market cap, generating massive headlines.
**Burry Breaks Silence with Warning**
After two years away from social media, Burry broke his silence on October 31, posting on X: “Sometimes we see bubbles. Sometimes the only winning move is not to play.” This comment came as Nvidia reached peak valuations.
Nvidia stock subsequently dropped further when its CEO, Jensen Huang, suggested that China might be catching up in AI development.
**Market Sentiment and Crypto Parallels**
Trader Deltan, a prominent crypto market analyst, referred to Burry’s recent market warning as “the most accurate thing anyone’s said this cycle.” Deltan predicts Bitcoin could drop as much as 50% from its current highs.
Reinforcing the cautious mood, the Crypto Fear & Greed Index fell to 24 this week—its lowest since early 2023—while CryptoQuant’s Bull Score Index also plunged to zero, a level not seen since just before the last crypto bear market in January 2022.
**Stock Performance and Market Dynamics**
Despite Palantir reporting strong earnings this week, its stock still declined. The high valuations, together with Burry’s bets, appear to have created significant selling pressure. Major tech companies like Amazon and Meta continue to invest billions in AI, and cloud providers are reporting vigorous adoption of AI-driven business solutions.
Nevertheless, Burry’s put options symbolize a calculated hedge against what he sees as unsustainable prices. If the stocks do not fall, the options simply expire worthless. Yet, the concentrated size and focus of these bets stand out, given the current momentum in the AI sector.
**Conclusion**
While many hedge funds use options to hedge their positions, Michael Burry’s bold stance against Nvidia and Palantir highlights growing concerns about overheated valuations—even in today’s AI-driven market. As the debate over the sustainability of the AI rally continues, all eyes will be on the performance of these two companies—and on whether Burry’s bearish call proves prescient once again.
https://coincentral.com/michael-burry-shorts-nvidia-and-palantir-with-1-1-billion-wager-smart-move-or-risky-play/