Earthquake on Wall Street linked to the AI industry. Michael Burry, the legendary investor known from the movie “The Big Short” who made a fortune predicting the 2007 real estate market crash, has just bet $1.1 billion against two giants of the AI revolution. His goal? Nvidia and Palantir – companies that until recently seemed indestructible. Is the artificial intelligence bubble really about to burst?
The Big Short investor is playing hard – betting on the fall in the value of the giants
Burry’s investment firm Scion Asset Management bought more than $1 billion in stock put options. The portfolio included Palantir securities worth USD 912 million and shares of chipmaker Nvidia worth USD 187 million – according to The Telegraph. Put options are a financial instrument that allows you to profit from falling stock prices, and Burry has a history of successfully spotting speculative bubbles. And not just any ones, because the “Big Short” investor predicted the crisis and the bursting of the 2007 real estate bubble.
James Kardatzke from the Quiver Quantitative platform points out that an American investor regularly places large bets on declines when he notices the market is overheating. This time, the AI industry was in his sights.
Warning signals in the AI market
After a long break, the “Big Short” star returned to the X platform, publishing disturbing analyzes. One chart shows that the growth in capital spending by technology companies resembles the dot-com bubble of 1999-2000. Yes, this is the famous dot.com crash. The next post reveals the slowing pace of growth in demand for cloud services among major tech industry players.
Skepticism about AI company valuations is growing. An MIT report in August warned that most AI investments yield zero returns for companies, triggering a selloff in tech stocks. Even OpenAI’s Sam Altman admitted over the summer that investors may be “too excited.” David Solomon of Goldman Sachs was even more direct – much of the capital in AI will not produce returns. So is OpenAI’s $500 billion valuation just a fluke? Well, it is worth recalling that OpenAI still practically does not make any money itself, but still relies on investors’ money.
The market reacts nervously
The reaction was immediate. After the “Big Short” investor’s bet was revealed, Nvidia’s shares fell by 2%. in pre-market trading, while Palantir lost almost 7%. Notably, Nvidia’s market value recently exceeded $5 trillion – more than Germany’s GDP. Palantir shares surged 400%. during the year.
U.S. VC investors have already invested $161 billion in AI this year, accounting for two-thirds of their total spending. Most of this money went to just ten companies. Is Burry right again? History shows that it is worth taking his bets seriously. It is also worth watching the movements of industry giants, i.e. Google, OpenAI, Elon Musk and Antropic.
