TLDR
Michael Burry’s hedge fund bought $1.1 billion in put options betting against Nvidia and Palantir stock in the third quarter of 2025.
The “Big Short” investor placed $912 million against Palantir and $186.6 million against Nvidia as both stocks trade at elevated valuations.
Palantir trades at a P/E ratio of 417 with a price-to-sales ratio of 116, while Nvidia has a P/E of 53 and price-to-sales of 28.
Both stocks have declined since Burry’s position became public, with analysts warning of potential 50% market corrections ahead.
AI stocks now represent $23 trillion in market value, approaching the total U.S. GDP of $29 trillion.
Michael Burry just made his biggest AI bet. The investor famous for predicting the 2008 financial crisis has set his sights on two market darlings.
Burry’s Scion Asset Management purchased $1.1 billion in put options against Nvidia and Palantir during Q3 2025. The larger position targets Palantir with $912 million in puts. Nvidia faces a $186.6 million bet.
NVIDIA Corporation, NVDA
Put options allow investors to profit when stock prices fall. Burry used similar strategies before the housing market collapse. His track record includes shorting overvalued tech stocks before the dot-com crash.
The timing raises eyebrows. Nvidia recently hit a $5 trillion market cap while AI stocks dominate market headlines.
Extreme Valuations Drive Burry’s Strategy
The valuation difference between these companies tells the story. Nvidia stock trades at a P/E ratio of 53 and price-to-sales ratio of 28. Those numbers look reasonable compared to Palantir.
Palantir stock carries a P/E ratio of 417 and price-to-sales ratio of 116. The company generates $3.8 billion in trailing revenue but holds a $483 billion market cap.
Burry broke two years of social media silence on October 31. “Sometimes we see bubbles… sometimes the only winning move is not to play,” he posted on X. Nvidia had just reached record valuations.
Both stocks dropped after Burry’s positions became public. Nvidia fell further when CEO Jensen Huang suggested China might be catching up in AI development.
Market Context and Warning Signs
Eight of America’s top 10 most valuable companies focus on AI. Together they’re worth $23 trillion, nearly matching the entire U.S. GDP of $29 trillion.
Scion Asset Management operates differently than typical hedge funds. It holds few positions and changes them frequently. The fund owned just four stocks at Q3’s end, with options on four others.
Trader Deltan, a crypto market analyst, called Burry’s warning “the most accurate thing anyone’s said this cycle.” He predicts Bitcoin could drop 50% to $50,000.
The Crypto Fear & Greed Index hit 24 this week, marking “Extreme Fear” levels. That’s the lowest reading since early 2023. One month ago it stood at 60.
CryptoQuant’s Bull Score Index dropped to zero. The last time it hit this level was January 2022, right before the previous bear market started.
Recent Stock Performance
Palantir reported strong earnings this week but the stock still declined. The combination of high valuations and Burry’s bet created selling pressure.
Companies like Amazon and Meta continue investing billions in AI development. Cloud providers report strong engagement from business clients using AI platforms. The technology creates real value through automation and business improvements.
Burry’s put options provide flexibility. If prices don’t drop, the options expire worthless. Many hedge funds use options to hedge positions. His concentrated bets against Nvidia and Palantir stand out given the AI sector’s momentum and the extreme valuations both companies carry in today’s market.
