Michael Burry challenges the AI trade with big short bets on Nvidia and Palantir

Michael Burry, hedge fund manager of "The Big Short" fame, is calling the top in two of the stock market's favorite plays - and somewhat contradicting himself in the process. Burry's Scion Asset Management has bought put options covering 5 million shares of Palantir (PLTR), a trade valued at about $912 million, and puts for 1 million shares of Nvidia (NVDA), valued at about $187 million, a regulatory filing for the quarter ending Sept. 30 shows. Equity put options allow the purchaser to sell a stock at an agreed price, the strike price, on or before a particular date, the expiry date. Such positions are usually taken if the buyer expects the stock price to fall. Burry's 13-F filing to the Securities and Exchange Commission, which was sent about a week ahead of deadline, shows that the two short positions account for 80% of Scion's portfolio and therefore constitute a significant bet on a souring of the extremely popular AI trade. Burry's skepticism over the AI frenzy was shown in a new social media post late Monday when he highlighted the sector's circular capex. Other positions for Scion include a $153 million call option bet on Pfizer (PFE), and $61.5 million call bet position on Halliburton (HAL). Shares of both Nvidia, which makes AI-chips, and Palantir, an AI-focused software group, hit record highs on Monday, having gained 48% and 305% respectively over the last 12 months. However, many analysts have warned that Palantir in particular is very richly valued. The software group went into Monday's results announcement on 2025 price-to-earnings multiple of just over 300, according to FactSet. And despite delivering forecast-beating numbers, Palantir shares are down 4% in pre-market action on Tuesday. Nvidia' shares are slipping fractionally. The Scion Asset Management filing does not specify the details of the puts purchased, but option market observers on social media focused on some big trades occurring recently in out-of-the money contracts expiring later in 2026. Such a timeline would match with Burry's famous bets against subprime assets ahead of the 2007-08 financial crisis, when he realized it might take a while for the market to finally crack. However, Burry's move may be seen as contradicting what he said just last week. In a social media post he implied there was a stock market bubble, but that "sometimes, the only winning move is not to play." Burry's latest "Big Short" shows he is playing with much gusto. -Jamie Chisholm This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

Michael Burry challenges the AI trade with big short bets on Nvidia and Palantir

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