Big Short 2: Michael Burry bets on the decline of Palantir and Nvidia stocks. Is it worth copying?

Famed investor Michael Burry is shocking the investment world again. He's betting a fortune on the decline of Palantir and Nvidia—AI champions that top the Nasdaq. Is he right? Is he worth copying? We checked.

In this article you will learn:

• Who is Michael Burry?
• What AI-related stocks is Burry shorting?
• Are there reasons to short these shares?
• What were Burry's greatest successes and failures?

The Big Short 2, or Michael Burry back in action

Michael Burry. This name periodically electrifies the investment world. The American investor, widely known from the film "The Big Short," has proven in the past that he can execute brilliant market moves. He ultimately made several hundred million dollars shorting the American real estate market.

Now he's stirring up investor sentiment again. He's opened contracts for a decline in the value of company shares. Nvidia and PalantirHis sell position is worth $1,1 billion! His investment firm Scion Asset Management bought put options on shares of the analytical company Palantir worth USD 912 million (66% of his current portfolio) and on shares of the processor manufacturer Nvidia worth USD 187 million (13,5%).

🚨 BREAKING: Michael Burry goes short on $PLTR and $NVDA in his latest 13F filing

Scion Capital just bought put options on 1M Nvidia shares and 5M Palantir shares 👀

The Big Short is feeling bearish on AI pic.twitter.com/Kn6EcINm20

— Michael Burry Stock Tracker ♟ (@burrytracker) November 3, 2025

Just to clarify, put options It's a type of contract that gives the buyer the right to sell shares at a pre-determined price before a specified date, giving them the chance to profit from a decline in the price. More specifically, this mechanism involves granting the buyer the right to sell a specified number of underlying instruments (e.g., shares, currencies, commodities) at a predetermined price (the strike price or exercise price) within a specified time period (either on the expiration date or during the period until the option expires).

Of course, Burry electrified the founder and CEO of Palantir with this "play", Alex KarpThis technology company – specializing in data analytics using AI – has already risen 150% this year and 1,680% over the past five years, becoming one of the "workhorses" of the Nasdaq. Karp, a guest on CNBC, said Burry is simply crazy. He responded to investors betting on Palantir's stock price decline: "They're skeptical and wrong. We're in the business of providing an unfair advantage to American workers, American soldiers, and our investors."

$PLTR

Palantir CEO Alex Karp responds to new short sellers:

“They are in the business of being skeptical and wrong, we are in the business of giving an unfair advantage to American workers, American war fighters, and our investors.” pic.twitter.com/jqACvclViS

— amit (@amitisinvesting) November 4, 2025

Is Burry really crazy? Or maybe there are some rational reasons for shorting Palantir and Ndivia? Is it really worth copying Burry forever? Let's find out.

Why Michael Burry is shorting Palantir and Nvidia stocks

Michael Burry returned to the X platform after a long break, posting on his profile Cassandra Unchained warnings about a possible speculative bubble in technology stocks.

These aren't the charts you are looking for.
You can go about your business. pic.twitter.com/ICldNUp2OI

— Cassandra Unchained (@michaeljburry) November 3, 2025

He published three charts. And they're worth taking a closer look at, because they reveal Burry's reason for making such a bold move. contrarian playOne chart shows that the growth in capital spending by tech companies is skyrocketing, reminiscent of the formative years Internet bubble from 1999-2000:

In another chart, he showed that the growth rate of demand for cloud services from major tech companies has been slowing in recent years, not increasing:

The third chart shows a graph showing the increasing dependence of a growing number of technology businesses on Nvidia and OpenAI:

As a sort of post-scriptum, he added another one, highlighting quotes from Edward Chancellor's book "Capital Account." They show that before the dot-com bubble burst in the early 2000s, only a few percent of American telecoms' capacity was effectively utilized, and after 2002, companies valued at huge premiums were forced to beg their creditors for mercy:

Could Burry be right? As you can see, there are some clues, and there are more. Nvidia, which has grown its valuation by 1,350% in five years, has C / Z ratio 63, compared to 39 on the Nasdaq 100. This means it is valued significantly above the market. Nvidia's market value recently exceeded $5 trillion, making it the first public company with such a market capitalization—larger than the entire GDP of Germany. Nvidia's valuation reflects the belief that it is a leader in the AI ​​revolution, without which it is virtually impossible to imagine. What happens if we compare Nvidia's multiple valuation to its valuation? Cisco Systems – the stars of the dot-com bubble from over 20 years ago? It turns out that Cisco had a much higher P/E ratio than Nvidia at the peak of the dot-com bubble, around 200, meaning it was much more expensive relative to the profits generated at the time. Further, the P/E ratio for the Nasdaq 100 at that time was around 68, meaning at the peak of the bubble it represented 34% of Cisco's maximum P/E. Meanwhile, Nvidia's P/E ratio to the Nasdaq 100 is currently 62%, which may suggest there's still plenty of room for Nvidia and the entire Nasdaq market to revalue significantly.

However, doubts about AI company valuations are growing. Report The Massachusetts Institute of Technology report this August triggered a correction in tech stocks. Experts from this eminent institute warned that most AI investments yield zero return for companies, and 95% of AI project implementations in companies are abandoned mid-implementation. This report indicates that most companies are currently unable to extract real value from AI tools. (It's worth noting, however, that there have been some voices questioning the methodology used in the MIT study, including its very narrow definition of AI implementation success.)

Furthermore, it's worth citing quotes from extremely important figures in the stock market and AI industry from recent months. Quotes that are also alarming. Sam altman, CEO of OpenAI, admitted this summer that "investors are overexcited." He emphasized that AI is a "big thing," but compared the current situation to the dot-com bubble at the turn of the century, emphasizing in a truly poetic way the mechanism that leads to excessive speculation: "When bubbles form, smart people get overexcited about the grain of truth." Altman stated that currently AI company valuations are "crazy" and as a result of this fever, "someone will lose a huge amount of money", although he emphasized that "it will definitely not be OpenAI".

Recently David Solomon, CEO of Goldman Sachs, warned that a significant portion of the capital invested in AI will not yield returns. He pointed to the expansion of AI infrastructure as a key driver of growth for the US economy, with the largest Big Tech companies spending $350 billion this year on this purpose. "Whenever there's a technological acceleration and people get excited about it, we see significant capital investments made in search of opportunity. We've seen this before in history. And as we know, this growth won't be a straight line. There will be winners and losers, and it's difficult to identify them right now. A large portion of the capital invested in AI will not bring appropriate returns, and some will not bring them at all," he said.

It is worth noting, however, that Burry has a much larger short position in the stock. Palantira than Nvidia. We will not describe the company founded by Alex Karp in detail here, because we did it recently in TYM Palantir focuses on building software that analyzes large data sets using AI to support complex decision-making processes. Palantir's valuation has been growing rapidly in recent quarters, but many of Alex Karp's and the company's actions are perceived as unethical and contrary to human rights, and in addition, it operates based on an unusual shareholder structure that raises corporate governance concerns. Furthermore, analysts (RBC Capital) are raising concerns about the reliability of data on the dynamic growth of the commercial segment (they may be distorted by yet-to-be-recorded resignations). If you want to know more about Palantir, please refer to our analysis.

Burry has had great successes, but also painful failures.

Does Michael Burry always have a nose? "The general must be lucky" – Napoleon used to say. Is Burry always lucky? Well, not necessarily.

Yes, the legendary doctor has had great investment successes. His most spectacular success was predicting and cashing in on subprime mortgage crisis In 2007-2008, he made a bet against the real estate market. While analyzing the subprime mortgage market, he identified a huge "crack" in the structure of these loans. He used derivatives (credit default contracts, or CDS) to bet on a scenario in which portfolios of these risky loans would become worthless. When the subprime market collapsed, his fund, Scion Capital, earned investors over $700 million, and Burry himself was enriched by approximately $100 million. The return on this particular investment reached approximately 500%, a feat immortalized in the film "The Big Short."

It became famous again in 2020 when invested significant funds in the company's shares GameStop (GME)It was a struggling gaming accessories chain being shorted by Wall Street sharks. However, a grassroots investor movement emerged on the WallStreetBets forum to save GameStop, and around the same time, Burry was taking positions on the company's share price. Exact figures are unknown, but speculation suggests Burry made between $100 million and $250 million from the operation. However, he exited his position prematurely and would have made much more had he been more patient.

Burry is generally an extreme contrarian, fond of deep fundamental analysis (often focused more on systemic risk than on the current trend). This leads to situations in which his theses are premature or incorrect. One of his most famous mistakes is calling for shorting the S&P 500 index in August 2023. His fund opened massive short positions on the decline of the SPDR S&P 500 ETF Trust (SPY) and the Invesco QQQ Trust (QQQ). In late November 2023, it emerged that Burry had closed those positions and exited his bet, suffering a loss of about 40%.

Another big mistake was investing in Porsche Automobile Holding SE, which he began in the spring of 2021. This was a period when Burry strongly believed in the industry's revival and also believed in Volkswagen's potential in competing with Tesla. Meanwhile, Porsche SE has a roughly 30% share of the Volkswagen Group. Of course, Burry also saw great growth potential in the premium sports car market. However, in subsequent quarters, Burry gradually withdrew his investment in Porsche SE, and the company's valuation plummeted, falling by approximately -60% from spring 2021 to the present.

Big Short 2 – what are the conclusions?

Michael Burry is a great investor. A great contrarian. No one can take that away from him. But he also makes mistakes. And sometimes he makes big mistakes. And it's not worth blindly copying him, although it's worth noting what he does in the market and conducting your own critical analysis.