The financial mind who predicted the biggest market collapse in recent history is playing his hand once again.
Michael Burry, the investor and hedge fund manager whose prediction of the 2008 housing market crash inspired the 2015 film The Big Short, has disclosed two put options against tech giants Nvidia and Palantir totaling more than $1 billion. A put option is a bet that speculates about and profits from a company’s share price falling.
Filings from the Securities Exchange Commission released on Monday show that Burry’s hedge fund, Scion Asset Management, purchased $187 million and $912 million in bets against Nvidia and Palantir, respectively—as concerns surrounding the true valuations of artificial intelligence companies spark rumors of a potential AI bubble.
The decision from Scion marks a second bet against Nvidia by the hedge fund since it disclosed a $98 million put against the company during the first quarter of the year.
Nvidia, which became the first company to reach over $5 trillion in market value last week, dropped more than 3 percent on Tuesday as of 3 p.m. EST while Palantir dropped nearly 9 percent. Both the Nasdaq Composite and the S&P 500 also dropped a percentage point on Tuesday.
Palantir CEO Alex Karp melted down over Burry’s bets during an interview with CNBC’s Squawk Box, calling the idea “bats--t crazy.”
“The two companies he’s shorting are the ones making all the money, which is super weird,” Karp said. “He’s actually putting a short on AI.”
Burry took to X last Thursday to share a cryptic post harkening back to his prediction of the housing bubble nearly two decades ago along with a popular photo of Christian Bale’s portrayal of him in The Big Short.
“Sometimes, we see bubbles. Sometimes, there is something to do about it,” he said in the post. “Sometimes, the only winning move is to not play.”
Burry’s X account shows only three other posts, one of which depicts a chart suggesting the AI boom is sustained by partnerships between Nvidia and OpenAI while another post shows a highlighted passage from Edward Chancellor’s book Capital Account.
“By 2002, it was commonly reported that less than 5 per cent of US telecoms capacity was in use,” the highlighted passage reads. “Wholesale telecoms prices fell by more 70 per cent a year in 2001 and 2002. Many of the companies which not long before had been valued at huge premiums to their invested capital, now sought protection from creditors.”
Burry seems to be hinting that the actual value of AI technology may not be worth the lofty valuations placed on the companies that produce it, warning that a potential market crash may be in the future.
