Michael Burry, the legendary investor who famously predicted the 2008 financial crisis, has made another audacious move: he's poured 80% of his fund into bets against the current AI hype.
His firm, Scion Asset Management, disclosed holdings of:
- $900 million in put options against Palantir (PLTR)
- $200 million in put options against Nvidia (NVDA)
Burry himself took to X (formerly Twitter) with a poignant observation: "Sometimes the only winning move is not to play." This incredibly bold action sees him placing significant wagers against two of the key growth engines of the current market.
Is the AI Market a Bubble?
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Many market observers are increasingly echoing Burry's sentiment. The signs of a potential bubble are indeed present: sky-high valuations, intense speculative interest, and a fervent belief in endless future growth. However, buying put options against a powerhouse like Nvidia is certainly not for the faint of heart, or for anyone without ultra-high-net-worth status.
Understanding the "Big Short"
For those unfamiliar with Burry's track record, a deep dive into his past actions is highly recommended. Reading "The Big Short" by Michael Lewis or watching the excellent film adaptation will provide invaluable insight into the nature of greed, market bubbles, and how Burry foresaw the subprime mortgage crisis. Both the book and the movie are fantastic resources for understanding these complex financial phenomena.
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The Upside of a Downturn
Should the AI bubble indeed burst, it's crucial to remember that this isn't necessarily a bad thing. Crises, while painful, create immense opportunities. The aftermath of the 2008 crash, for example, saw the founding of iconic companies like Airbnb and Uber.
A market correction could ultimately benefit founders who are building real businesses with sustainable revenue models from actual customers, rather than relying solely on speculative investment and hype.
