Burry's $1 Billion Bet Against AI Darlings—What's He Seeing That Wall Street Missed?

The man who called the housing crash is making headlines again. Michael Burry, the legendary investor behind The Big Short, just placed a staggering $1 billion+ bet that Nvidia and Palantir stock prices will tank. And honestly, that’s making the entire market nervous.

The Play That Changed Everything

Let’s rewind to the early 2000s. While everyone was bullish on the U.S. housing market, Burry saw red flags—unsustainable lending practices, inflated valuations, systemic risk. He shorted the market. When the subprime crisis hit, his clients walked away with over $700 million in gains. Hollywood later immortalized his prescience in The Big Short.

Fast forward to now: Burry’s doing it again, but this time in the red-hot AI sector.

The $1 Billion Question

According to his latest 13F filing with the SEC (the quarterly disclosure that gives us a peek into top money managers’ playbooks), Burry bought:

• $186 million in put options on Nvidia (NASDAQ: NVDA)
• $912 million in put options on Palantir Technologies (NASDAQ: PLTR)

For those unfamiliar, a put option is essentially a bet that a stock will fall in price. You’re betting against it, and if you’re right, you profit.

Here’s what makes this shocking: Both companies are absolutely crushing it right now.

The Contradiction

In Q3, Palantir delivered double-digit revenue growth and strong profitability, with bullish guidance for the full year. Nvidia? Record revenues and margins. Their stock performance has reflected this dominance—Nvidia up 1,200% and Palantir up 2,200% over the past three years.

Yet Burry is effectively saying: “I think these stocks are going lower.”

So what does he know?

The AI Bubble Debate

Wall Street has been buzzing about whether an AI bubble is forming—or has already formed. Some point to the explosive valuations of AI stocks. Others argue that earnings growth justifies current prices, and the long-term opportunity remains massive (AI market projected to exceed $2 trillion by decade’s end).

The debate has spooked traders in recent weeks, but here’s the nuance: just because a sector trades on hype doesn’t mean quality companies within that sector will crash.

A Reality Check on Burry

Important context: Burry made this Q3 bet months ago, and we don’t know if he’s held or exited the position since. We also don’t know if this is a short-term tactical trade or a long-term conviction play. And critically—Burry isn’t infallible. In 2023, he called a “sell” on X, then admitted weeks later he’d been wrong.

His track record is exceptional, but he’s still human.

What This Means for Your Portfolio

Burry’s massive bet shouldn’t trigger a sell-off of all AI stocks. Instead, use it as a reality check:

• Valuations have climbed significantly—so be selective about entry points
• Stick with quality long-term stories—companies with sustainable competitive advantages, growing earnings, and genuine moats around their business
• Diversify ruthlessly—don’t go all-in on any single sector, no matter how hot
• Stay the course—if you own solid companies in AI or elsewhere, near-term volatility is noise

Whether Burry’s bet pays off or not, these principles will help you navigate market turbulence and build wealth over decades.