The ‘Big Short’ trader is back with a massive $1B bet against the AI frenzy

Michael Burry aims at the AI frenzy

Michael Burry, the investor portrayed in The Big Short, disclosed in a quarterly filing that his firm, Scion Asset Management, held put option positions with a combined notional value of about $1.1 billion against Nvidia and Palantir for the quarter ended September 30, 2025.

It’s a move reminiscent of his famous 2008 play against the housing market, and it’s stirring the same mix of fascination, skepticism, and fear across Wall Street.

Betting against the AI darlings

Scion’s filing shows put option positions amounting to roughly $912 million in notional value on Palantir and roughly $187 million on Nvidia, though the filing does not disclose strike prices or expiration dates for the contracts.

It’s not a casual bet; it’s a calculated signal that he believes the current wave of AI valuations may have outpaced reality. For many investors, it’s déjà vu from the dot-com and housing bubbles that Burry so famously foresaw.

The man who saw the crash before anyone else

Burry is best known for placing big long-term bets against subprime mortgages in the mid-2000s; Scion delivered about a 489 percent return from November 2000 through June 2008, a performance that underpinned his reputation.

His story was chronicled in Michael Lewis’s “The Big Short” and later adapted into the Oscar-winning film starring Christian Bale. Now, he’s once again raising alarms, this time about AI exuberance.

The warning signs he sees today

Burry recently resurfaced on X (formerly Twitter) after months of silence, sharing charts that compared today’s tech investment boom to the 1999–2000 dot-com bubble.

One of his posts showed U.S. tech capital spending soaring at bubble-like levels. Another revealed that growth in cloud computing demand is slowing, suggesting that tech’s rocket fuel may be running out just as investors are pouring in record sums.

The post that reignited old fears

Alongside a still from The Big Short, Burry shared a short message about market exuberance that quickly caught the attention of finance circles online. The post carried the kind of understated skepticism people often associate with him.

For anyone who remembers the atmosphere around his early warnings years ago, it had a familiar feel, a calm reminder that market sentiment can sometimes tilt too far in one direction.

Nvidia becomes the symbol of AI mania

Nvidia’s meteoric rise has become the defining story of 2025. The chipmaker recently crossed a $5 trillion valuation, making it briefly worth more than Germany’s entire GDP.

Its dominance in AI hardware has made it the poster child of the artificial intelligence revolution. But such astronomical growth, in Burry’s eyes, could be precisely what precedes a painful correction.

Palantir’s stock surge draws scrutiny

Palantir, once known for government data analytics, reinvented itself as an AI-driven software company. Its stock has soared nearly 400% over the past year. Investors see it as a key beneficiary of the AI transformation, but Burry isn’t convinced.

His massive put position on Palantir signals doubts about whether its valuation truly reflects long-term fundamentals or just market euphoria.

What a “put” bet really means

A “put” contract gives its holder the right to sell shares at a predetermined price. If a stock falls, the value of those contracts rises. Essentially, Burry is betting on decline profiting if AI’s most hyped names stumble.

The specifics of his trades, like expiration dates or strike prices, remain undisclosed. Still, the sheer size of the wager over a billion dollars has rattled the market.

Investors begin questioning AI valuations

The AI boom has pushed Wall Street into frenzy mode. U.S. venture capitalists have invested $161 billion in AI this year alone, with two-thirds of that amount going to just ten companies.

Yet studies like one from MIT warn that most AI investments have produced “zero returns” so far. Even OpenAI’s Sam Altman admits investors are “overexcited.” Burry’s bet, then, feels less like panic and more like a pragmatic reality check.

Markets wobble as Burry’s bet goes public

Within hours of his positions becoming public, Nvidia’s shares dipped around 2%, and Palantir’s slid nearly 7% in pre-market trading. That reaction underscored how much weight Burry’s name still carries.

By the end of the week, the broader tech sectors, especially the “Magnificent Seven” stocks, also saw declines, suggesting his skepticism may have resonated with jittery investors.

The AI bubble debate heats up

Burry’s stance has reignited a fierce debate about whether AI is the next transformative revolution or the next bubble waiting to burst. Supporters argue AI will reshape every industry.

Critics, including Burry, counter that expectations have become detached from near-term financial reality. With valuations soaring ahead of profits, the question isn’t if AI will thrive, but whether its current price tags are sustainable.

AI remains transformative even amid caution

Despite warnings, few deny AI’s potential. The technology is reshaping industries across healthcare, finance, and manufacturing. However, investors like Burry argue that transformative potential doesn’t always translate into immediate profits.

The road from innovation to monetization is long, and that disconnect may be where today’s bubble risk lies. AI breakthroughs are arriving faster than business models can adapt, creating a gap between hype and measurable returns.

Learn how one AI leader is pushing back against political criticism in Anthropic CEO responds to Trump officials’ AI fear-mongering accusations.

The comeback of a cautious contrarian

Michael Burry’s $1 billion wager has once again made him the contrarian voice in a euphoric market. Whether he’s early, wrong, or prescient remains to be seen.

What’s certain is that he’s reminded the world that even the most promising revolutions can overheat.

As AI fever grips global markets, his message lands like a whisper from history. Bubbles don’t announce themselves, but they always end the same way.

See how rising investor tension is shaking up another major AI deal — the $5B CoreWeave acquisition — as another investor objects.

What do you think about the AI bubble that is scaring investors from betting on AI? Please share your thoughts and drop a comment.

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This slideshow was made with AI assistance and human editing.