The Short Heard Around the Valley

Michael Burry doesn’t short quietly. When the man behind "The Big Short" takes a $1 billion bearish position against two of the most iconic AI stocks — Nvidia and Palantir — it’s not just a trade. It’s a statement.

In Q3 2025, Burry’s Scion Asset Management disclosed massive put options on 5 million shares of Palantir and 1 million shares of Nvidia. The market took notice. Palantir’s stock dropped 15% within days. CEO Alex Karp called the move "batshit crazy." Burry fired back that Karp "can’t read a simple 13F."

But beneath the headline clash lies a far more important question: is Burry right?

1. Valuation Extremes
Palantir’s price-to-earnings ratio hovered around 240×, with price-to-sales exceeding 150× — nosebleed territory. Nvidia, despite record profits, became the most valuable company on Earth in 2025. Both names are priced for perfection. And when perfection stumbles — as Palantir’s post-earnings drop showed — the fall is steep.

To Burry, these multiples may evoke the dot-com era, where tech optimism routinely overwhelmed reality. When stocks are this inflated, even strong quarters can disappoint if the market expected miracles.

2. Sentiment Over Substance?
Despite strong earnings, stocks like Palantir and Nvidia sometimes drop on good news. Why? Because good isn’t good enough when the hype is baked in. Burry sees this as a classic bubble dynamic: when expectations soar too fast, even success feels like failure.

He’s also flagged cloud growth data that shows AI-era acceleration is not materially above pre-AI trends. That raises the question: is AI really unlocking new economic territory — or are we just reshuffling enterprise spend into a hotter narrative?

3. Industry Saturation and Circular Growth
Nvidia sits at the center of a self-reinforcing ecosystem — it invests in AI startups, sells chips to them, and watches its own valuation benefit from their growth. That circularity might inflate perceived demand. Burry appears to believe the sector’s rapid expansion could outpace real-world returns.

There’s also the issue of capex. AI infrastructure buildouts are consuming billions — new data centers, model training, chip orders. If monetization doesn’t match those outlays, the whole pyramid weakens. Burry may view this as a leverage cycle in disguise.

4. Geopolitical Fragility
Nvidia’s chips are now regulated by the U.S. government — its most advanced products cannot be exported to China. That preserves strategic advantage, but also cuts off a massive market. In short: geopolitical protection comes at a business cost.

China’s ambitions to develop indigenous AI chips aren’t idle either. Should they succeed, Nvidia could lose access not only to Chinese buyers, but also influence over standards and innovation pace. Burry might be betting that geopolitical entanglement becomes an anchor, not a tailwind.

1. This Isn’t a Hype Cycle — It’s an Inflection Point
AI adoption is still early. Nvidia’s chips are sold out quarters in advance. Enterprises, governments, and cloud providers are scaling up AI infrastructure globally. The runway is long, not short.

Unlike prior tech bubbles built on uncertain revenue models, today’s AI investments are already unlocking value. From logistics to defense to healthcare, AI is driving measurable productivity — and Nvidia and Palantir sit at that operating core.

2. Financials That Back the Story
Palantir’s Q3 2025: revenue up 63%, commercial U.S. sales up 121%, contract value up 151%. Nvidia’s data center revenue is growing triple digits, with free cash flow to match. These aren’t meme stocks — they’re high-growth, high-margin leaders.

Palantir’s guidance upgrades signal confidence, not desperation. And Nvidia’s profit engine isn’t cyclical—it’s tied to secular growth in compute demand. If anything, fundamentals are playing catch-up to vision.

3. Competitive Moats
Nvidia dominates the AI chip stack — hardware, software, developer ecosystem. Palantir holds exclusive government contracts and delivers mission-critical AI tools. Their dominance isn’t cosmetic — it’s functional and defensible.

Palantir’s integration of its AI Platform (AIP) into commercial sectors could catalyze a second growth wave, unlocking use cases beyond the public sector. And Nvidia’s CUDA and software stack create vendor lock-in that strengthens over time.

4. Strategic Relevance — Especially for Nvidia
This is where things get bigger than markets. Nvidia has become the geopolitical backbone of AI infrastructure. It is to AI what NASA was to space tech during the Cold War.

The U.S. government has openly called Nvidia’s chips "too important to export." The CHIPS Act subsidizes its future. Policymakers view its collapse as unthinkable. In effect, Nvidia may already be "too big to fail."

Much like defense contractors or infrastructure monopolies, Nvidia may now occupy a structural role in Western competitiveness. Betting against it is betting against both the private market and the public sector’s shared priorities.

Online stockbrokers have become the go-to way for most people to invest, especially as markets remain volatile and tech stocks keep driving headlines. With just a few taps on an app, everyday investors can trade stocks, ETFs, or even fractional shares—something that used to be limited to Wall Street pros. Check out Money’s list of top-rated online stock brokerages and start investing today!

Start investing

Burry’s short is a bet against consensus. It questions whether the AI boom has outpaced economic reality. But it also challenges whether strategic companies can still be judged by traditional metrics.

What if Nvidia isn’t just a business — but national infrastructure?
What if Palantir isn’t just a software firm — but a backbone of military AI?

Burry may be right on valuations. But he may be wrong on timing — or on the fact that some companies, at certain moments, operate with gravity beyond their fundamentals.

He’s betting that this isn’t different — that this is yet another tech rally doomed to mean reversion. But history reminds us that sometimes, the curve doesn’t return to the mean. Sometimes, it redefines it.

The market will ultimately decide. But this moment — when a legendary contrarian goes short on the biggest AI winners — is worth watching closely.

Because whether you agree or not, it reveals the stakes:

Are we in an AI bubble?
Or is this the opening act of a new industrial revolution?

Time will tell. But for now, Burry’s short is the most important dissent in Silicon Valley.

Want the best price on every swap? CoW Swap evaluates routes across DEXs in real time and settles the most efficient path. Tighter pricing, higher success rates, fewer reverts. Find your best price.

Sources: