‘Big Short’ Investor Michael Burry Bets Against AI Leaders as Industry Soars to $391 Billion

What Happened

Michael Burry, the hedge fund manager who rose to fame for correctly predicting the 2008 housing collapse, is now betting that some of the most celebrated companies in artificial intelligence are headed for a fall.

According to recent filings, Burry’s firm, Scion Asset Management, has taken out large put option positions against Nvidia and Palantir. These are two companies viewed as central players in the AI boom. A put option is a bet that a stock’s price will drop.

Nvidia is one of the key beneficiaries of the AI explosion. Its chips power everything from large language models to enterprise-grade machine learning systems. Palantir provides AI-backed data platforms to governments and businesses. It has also aggressively marketed itself as an AI-first company.

Burry’s bearish position suggests he sees signs of overvaluation or unsustainable growth. He has not publicly explained the trades. The move is attracting attention due to his history of spotting bubbles before they burst.

Why It Matters

AI is transforming how industries operate, from finance and defense to medicine and retail. According to Stanford’s 2025 AI Index, 78% of global organizations reported using AI in their operations last year. This is up from 55% in 2023.

At the same time, the global AI market hit $391 billion in 2025. It is expected to surpass $3.5 trillion by 2033. This data comes from Exploding Topics. Major companies are investing billions to integrate AI into their platforms and workflows. They aim to boost productivity, reduce costs, and outpace competitors.

Nvidia has been one of the biggest beneficiaries. Its market value has soared due to demand for its GPUs, which are essential for training and running AI models. Palantir has pitched its platforms as essential infrastructure for AI decision-making in the public and private sectors.

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But Burry’s move is a warning that the investment frenzy around AI may be running too hot. Adoption is real. However, valuations may be pricing in decades of growth that are far from guaranteed. A company can be central to AI and still be overvalued.

Burry’s skepticism is rooted in fundamentals. His investment style is based on identifying where hype has outrun actual value. In 2005, he was mocked for shorting mortgage-backed securities. By 2008, he had earned hundreds of millions of dollars while Wall Street was collapsing. Now he sees echoes of that same irrational exuberance. This time, it is not houses or credit swaps but artificial intelligence.

How It Affects You

If you are investing in AI stocks or tech funds, this is a moment to pause and reassess your strategy. Burry is not saying AI is a fad. He is saying the market may have priced in too much, too fast.

Retail investors are particularly vulnerable when market momentum becomes decoupled from actual performance. Many AI-related stocks have surged based on their future promise. This has happened even when their current profitability is limited. If a correction hits, high-flying companies could tumble quickly.

Nvidia and Palantir may continue to play central roles in the future of AI. This does not mean their stock prices will rise in a straight line. Burry’s bet highlights a core risk in the current environment. When too much capital chases too few valuable opportunities, even good companies can become bad investments at the wrong price.

The AI revolution is real. Even real revolutions can get ahead of themselves. For investors, the challenge now is to separate long-term potential from short-term mania. It is also important to remember that market gravity still exists.