According to Business Insider, Michael Burry’s Scion Asset Management made two massive bearish bets last quarter, purchasing put options on 1 million Nvidia shares worth $187 million and 5 million Palantir shares worth $912 million. The famous investor who predicted the 2008 housing crash returned to X after a two-year hiatus to warn about AI bubble risks, posting charts showing slowing cloud growth and surging tech capital expenditures. Burry referenced the movie WarGames with his post “Sometimes, the only winning move is not to play” and updated his profile to “Cassandra Unchained: Missteps to Mayhem, Coming December 2025.” Both Nvidia and Palantir stocks dropped significantly following the disclosure – Nvidia fell 4% while Palantir plunged 8%. Palantir CEO Alex Karp publicly questioned why Burry would short companies that are “making all the money.”
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The Cassandra complex
Burry’s positioning himself as the modern Cassandra – the Greek prophet cursed to speak truth but never be believed. And honestly, he’s got the track record to command attention. His latest warnings focus on three key charts that should make any investor nervous. First, cloud growth at Amazon and Alphabet is slowing sharply. Second, tech capital expenditures are surging at rates similar to the dot-com bubble and 2008 crisis. Third, there’s circular dealmaking between Nvidia, OpenAI, Oracle, and Microsoft that looks suspiciously like the telecom infrastructure boom that went bust.
<h2 id="massive-bets“>Putting money where his mouth is
Here’s what’s really striking – these aren’t just tweets. Burry backed his warnings with actual billion-dollar bets. The put options on Nvidia and Palantir dominated his entire US stock portfolio, which only had eight holdings total. That’s an incredibly concentrated position. Basically, he’s saying he’s so confident about an AI correction that he’s willing to risk his fund on it. But the danger, as AJ Bell’s Russ Mould points out, is that Burry could “get run over by momentum and liquidity-fueled markets” if these stocks keep climbing.
Why this matters now
Look, we’re talking about companies with insane valuations. Nvidia just became the first $5 trillion company last week. Palantir’s worth nearly $500 billion – more than Mastercard or Exxon Mobil. And here’s the thing: when expectations are this high, any disappointment can trigger massive selloffs. Daniel Bustamante from Bustamante Capital Management put it perfectly – we have “all tinder soaked in gas, and all it takes is a lit match.” Retail investors are crowded into these names, margin debt is at all-time highs, and capital spending is already hurting earnings growth. Sound familiar? It should – we saw this movie in 2000.
The contrarian play
So is Burry right or just early? That’s the billion-dollar question. His whole investment philosophy revolves around breaking from social norms and doing sober analysis when everyone else is chasing hype. Remember his quote from 2011: “Entire societies can and often do follow the wrong path for a very long time.” The AI revolution might be real, but that doesn’t mean current valuations make sense. History shows that transformative technologies often lead to investment bubbles before they lead to profitability. Whether Burry’s timing is right remains to be seen, but his warning deserves consideration amid all the AI euphoria.
