Echoes of 2000: Burry's $900M AI Short Challenges $5T Valuations

Michael Burry, the hedge fund manager behind the "Big Short" fame, has taken a massive bearish position in Palantir Technologies (PLTR) and NVIDIA (NVDA), betting against two of the most prominent names in the artificial intelligence sector. Scion Asset Management, Burry's firm, disclosed in a recent regulatory filing that it holds five million put options on Palantir and one million puts on NVIDIA, amounting to $912.1 million and $186.58 million in market value, respectively, according to a Benzinga report. This move underscores growing skepticism about the sustainability of valuations in the AI space, particularly as companies like Palantir and NVIDIA continue to secure high-profile partnerships and expand their influence in enterprise and government markets, as noted in the Watcher.Guru report.

The partnership between NVIDIA and Palantir, announced in October 2025, has been a key driver of recent optimism for both stocks. The collaboration integrates NVIDIA's GPU-accelerated computing, CUDA-X libraries, and AI models into Palantir's AI Platform (AIP), aiming to deliver real-time decision intelligence for industries such as logistics, healthcare, and finance, according to a Simply Wall analysis. NVIDIA's Blackwell architecture will further enhance Palantir's capabilities, enabling optimized AI workflows for complex operational pipelines, a detail highlighted in the Watcher.Guru report. Palantir CEO Alex Karp emphasized the partnership's potential to "deliver immediate, asymmetric value to customers," while NVIDIA's Jensen Huang highlighted the synergy of combining Palantir's platform with NVIDIA's infrastructure.

However, Burry's bearish stance reflects concerns about overvaluation and execution risks. Palantir's stock has surged 169% year-to-date, with its market capitalization reaching $471.6 billion, while NVIDIA's shares hit a record $5 trillion valuation, as reported in a Yahoo Finance article. Analysts note that Palantir's valuation is stretched relative to peers and its own fair value estimates, with some models suggesting the stock is over 60% overvalued, according to a Simply Wall valuation. Similarly, NVIDIA faces scrutiny over its dominance in AI chips and potential regulatory headwinds, including worries about Chinese military use of its GPUs, discussed in a Yahoo Finance segment. Burry's recent social media activity, including references to an "AI bubble" and comparisons to the 1999-2000 tech boom, further signal caution; those comments were documented in the Benzinga coverage.

Institutional investors have also shown mixed signals. Cardano Risk Management B.V., a Dutch fund, increased its NVIDIA holdings to $1.21 billion in the second quarter, making it the firm's largest position, according to a MarketBeat filing. Meanwhile, Cascade Investment Group Inc. expanded its stake in NVIDIA, reflecting broader institutional confidence in the chipmaker's growth trajectory, per another MarketBeat filing. Yet, Burry's aggressive shorting contrasts with these bullish moves, highlighting divergent views on the AI sector's near-term prospects.

The partnership's success hinges on Palantir's ability to scale its AI solutions across enterprise clients and NVIDIA's continued innovation in accelerated computing. Palantir's recent Q2 2025 results, including $1 billion in revenue and 48% year-over-year growth, have bolstered its narrative as a leader in government and corporate AI adoption, as noted in the Yahoo Finance article. However, reliance on government contracts and high execution expectations pose risks, particularly if demand slows or competition intensifies, a concern raised in the Simply Wall valuation.

As the AI race accelerates, Burry's bet against Palantir and NVIDIA could signal a pivotal moment for the sector. While the partnership between the two firms represents a significant step toward operational AI integration, investors remain divided on whether the current valuations reflect realistic growth assumptions or speculative fervor. With AI spending projected to grow exponentially, the coming months will test both the resilience of these companies and the wisdom of Burry's contrarian stance.