‘Big Short’ Investor Michael Burry Is Betting Big Against the AI Revolution

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Quick Read

Palantir represents Burry’s largest position at $912M in notional value, with Nvidia puts at $186M, betting on a decline in AI stocks. Michael Burry’s Scion Asset Management allocated 80% of its $1.1B portfolio to put options against Palantir (PLTR) and Nvidia (NVDA). Some investors get rich while others struggle because they never learned there are two completely different strategies to building wealth. Don’t make the same mistake, learn about both here.

Michael Burry is the billionaire investor famous for predicting the 2008 housing crash immortalized in the book and movie titled, "The Big Short." While he doesn't always short stocks -- Burry's Scion Asset Management hedge fund just bet big on Molina Healthcare (NYSE:MOH) -- it seems that Burry has turned his skeptical eye toward the artificial intelligence (AI) sector. In Scion's recently filed 13F filing, the billionaire disclosed substantial put options on two of the leading AI companies: Palantir Technologies (NYSE:PLTR) and Nvidia (NASDAQ:NVDA).

These bets position him to profit if the stocks decline, signaling his doubt in the ongoing AI hype. The move raises the question of whether Burry is a contrarian warning to investors, or just another pessimistic call from an AI perma-bear.

Burry's History of Bold Calls

Burry first gained widespread recognition for his role in the subprime mortgage crisis, as depicted in Michael Lewis's book detailing the bold call. Burry shorted mortgage-backed securities ahead of the 2008 collapse, turning a massive profit for his investors while the broader market cratered.

Since then, his track record has been mixed. He correctly anticipated market turmoil in early 2020 but has also made bearish bets that didn't pan out, such as warnings about overvalued tech stocks during bull runs.

Burry has been vocal on social media, often posting cryptic messages about market bubbles and economic risks. Just months before this filing, he hinted at concerns over inflated valuations in AI-driven equities, echoing his past critiques of market exuberance.

Details of the Put Options

In the third quarter, Scion allocated roughly 80% of its $1.1 billion notional portfolio value to these put options. The largest position is in Palantir, with puts covering about 5 million shares, valued at around $912 million. The Nvidia puts are smaller but still significant, at approximately $186 million.

Puts give the holder the right to sell shares at a predetermined price, profiting if the stock falls below that strike price. Importantly, these are notional values -- the actual capital outlay is much lower, as options require only a premium payment. This allows Burry to control large exposures with limited upfront cost, amplifying potential gains or losses. Scion's overall portfolio remains concentrated -- it only owns four stocks -- with these AI bets dominating its holdings.

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Questioning the AI Boom

Burry's positions challenge the narrative that AI will drive endless growth. Palantir, known for its data analytics software, has seen its stock surge on AI-related contracts with governments and enterprises. Nvidia, the chipmaker powering most of AI's infrastructure, has become a market darling, with shares rising dramatically on demand for GPUs. Yet Burry sees overvaluation.

He has previously compared the AI rush to past manias, like the dot-com bubble, warning that hype often outpaces fundamentals. Critics, though, point out that both companies reported strong earnings recently, with Nvidia's revenue growth tied to data centers and Palantir expanding its commercial client base.

Burry's bet suggests he anticipates a correction, perhaps from slowing AI adoption, regulatory hurdles, or broader economic slowdowns. It also underscores why smaller investors should not short stocks.

In the first quarter, Burry also bet big against Nvidia with $97.5 million in put options, about half his portfolio. Since then, Nvidia is up 50% in 2025 and is 85% higher since his trade was revealed. Small investors might not survive such a run shorting the stock as they could receive the dreaded margin call if their account value fell below margin maintenance levels.

While put options only put the premium paid at risk, they also come with expiration dates, meaning Burry's wager only has a certain amount of time to pay out, adding pressure to his thesis.

Key Takeaways

The big bet still serves as a reminder of contrarian investing's potential rewards and pitfalls. For those bullish on AI, it could signal caution -- perhaps prompting portfolio diversification, reallocation, or hedging. Bears might find validation in his stance, especially amid AI's rising energy consumption concerns or geopolitical tensions that affect tech supply chains.

Whether this bet pays off like his housing short or fizzles as his previous puts apparently did remains to be seen, but it highlights the ongoing debate over AI's sustainability as an investment theme.

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