According to Fortune, Michael Burry’s Scion Asset Management disclosed a $1.1 billion short bet against Nvidia and Palantir through an SEC filing. The move comes as global markets are plunging, with tech stocks taking the heaviest losses after driving most of 2025’s gains. In October alone, tech stocks contributed over 90% of the S&P 500’s total return, with the Magnificent 7 stocks accounting for 80% of that performance. Palantir just reported Q3 revenue of $1.2 billion, up 63% year-over-year, beating expectations despite trading down 3% in overnight sessions. CEO Alex Karp responded by calling Burry’s bet “batshit crazy” and vowed to “be dancing around when it’s proven wrong.” The disclosure comes as multiple Wall Street analysts question whether equities face a 10-20% correction.
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The Narrow Rally Problem
Here’s the thing that makes this situation so precarious. Markets globally have become incredibly dependent on just a handful of stocks. We’re not just talking about the Magnificent 7 driving 80% of S&P returns. Look at Asia – in Hong Kong, six tech stocks account for 50% of the Hang Seng’s returns this year. Korea? Two stocks responsible for 40%. Taiwan? One stock drives more than half the index’s performance. When markets get this concentrated, any stumble in those few names can take everything down with them. And that’s exactly what we’re seeing play out right now.
Why Burry’s Bet Matters
Michael Burry isn’t just any hedge fund manager. He’s the guy who famously placed “The Big Short” against subprime mortgages before the 2007 financial crisis. So when he takes a billion-dollar position against two of the hottest AI names, people pay attention. But here’s where it gets interesting – he’s shorting companies that are actually making money. Palantir just crushed expectations with 63% revenue growth. Nvidia remains the undisputed king of AI chips. So what does Burry see that everyone else is missing? Maybe he’s looking at Palantir’s $450 billion market cap against expected annual revenues of only $4.4 billion and thinking the math doesn’t add up. Or perhaps he believes the AI bubble has reached its peak.
The CEO Fight Back
Alex Karp’s reaction was everything you’d expect from a CEO whose stock just got targeted by one of the world’s most famous short sellers. He didn’t hold back. Calling the bet “batshit crazy” on CNBC, he pointed out the obvious – he’s shorting the companies that are actually generating massive growth. “The idea that chips and ontology is what you want to short is batshit crazy,” he said, referring to Nvidia’s semiconductor dominance and Palantir’s data ontology systems. Karp’s confidence comes from strong quarterly results and guidance, but the market seems to be listening to Burry more than Karp right now.
Where This Goes From Here
So we’ve got a perfect storm brewing. You’ve got extreme market concentration in tech stocks. You’ve got the most famous contrarian investor betting big against that concentration. And you’ve got CEOs fighting back while their stocks keep falling. The real question isn’t whether Burry is right or wrong – it’s whether this narrow market leadership can sustain itself. When six stocks in Hong Kong or two in Korea drive most of an index’s returns, any shift in sentiment becomes magnified. We’re already seeing the domino effect across global markets. And with Goldman Sachs and Morgan Stanley CEOs predicting a potential 10-20% correction, this could be the beginning of a much bigger unwind. One thing’s for sure – all eyes will be on that SEC filing and whether Burry’s billion-dollar gamble pays off again.
