According to Gizmodo, Michael Burry’s Scion Asset Management disclosed put options against AI giants Nvidia and Palantir in September 30 regulatory filings released Monday. Burry, famous for predicting the 2008 housing crash and being portrayed by Christian Bale in “The Big Short,” placed his largest bet against Palantir, whose stock has surged 150% this year. Nvidia recently became the only company ever to reach a $5 trillion valuation. Palantir CEO Alex Karp immediately responded on CNBC, calling Burry’s move “egregious” and promising to “be dancing around when it’s proven wrong.” Burry has been posting cryptic warnings on X, including charts showing declining cloud growth at Amazon, Alphabet and Microsoft between 2023-2025 compared to 2018-2022. Another chart indicated that current U.S. tech capital expenditure growth matches levels seen during the 1999-2000 tech bubble.
The Parallels Are Hard to Ignore
Here’s the thing about Burry’s warning – he’s not just betting against two stocks. He’s betting against an entire narrative. The comparisons to the dot-com bubble are becoming impossible to ignore. Every earnings call now features companies desperately mentioning “AI” in the same way every company in 1999 slapped “.com” on their name. And the numbers back this up – Apollo Global Management’s chief economist noted that today’s top S&P 500 companies are actually more overvalued than during the 1990s bubble peak.
Burry’s X posts tell a deeper story. One chart shows what he calls “circular dealmaking” with Nvidia at the center. Basically, we’ve got this incestuous investment pattern where AI companies keep investing in each other, creating this artificial ecosystem that props up everyone’s valuations. It’s like musical chairs with billions of dollars. When the music stops, who’s left standing?
History Repeating Itself?
The most chilling part of Burry’s warning comes from his book excerpt about the telecommunications crash. He highlighted how by 2002, less than 5% of US telecom capacity was actually being used. Thousands of miles of fiber optic cables sat dark underground. Sound familiar? We’re building AI infrastructure at a breakneck pace, but what if the demand doesn’t materialize as quickly as expected?
And that’s the crucial point Burry and other skeptics are making. It’s not that AI won’t transform society – the internet absolutely did transform everything. But investor enthusiasm consistently overshoots reality. The demand for fiber optics eventually came, just not fast enough to save the companies that built too much, too soon. The Fed researchers warned earlier this year about this exact risk, comparing it to the railroad over-expansion of the 1800s that led to an economic depression.
What Happens Next?
So where does this leave us? Burry’s betting real money that the AI hype has peaked. His SEC filings show concrete positions, not just Twitter speculation. Meanwhile, the companies he’s betting against are firing back with equal conviction. Palantir’s CEO isn’t just disagreeing – he’s practically taunting Burry.
The real question isn’t whether AI will change the world. It will. The question is whether current valuations reflect that future accurately, or whether we’re in another bubble where the “story” has detached from the financial reality. Burry’s entire pinned post about “the only winning move is not to play” suggests he thinks we’ve reached that point. Given his track record, maybe we should at least pay attention.
