Michael Burry’s hedge fund holds put options on 1 million Nvidia (NVDA) shares and 5 million Palantir (PLTR) shares, worth $186.58M and $912.1M respectively.
Nvidia stock has surged over 1,300% in five years to near $200, while Palantir shares have climbed 1,700% over the same period.
Palantir trades at a trailing P/E ratio of 439.45x while Nvidia sits at 57.41x, suggesting stretched valuations that may underpin Burry’s bearish positions.
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You may have seen the portrayal of famous financier and trader Michael Burry in the film The Big Short. Now, it appears that Burry is indirectly using options to take a “big short” position against a couple of widely touted large-cap artificial intelligence (AI) stocks.
Burry cemented his legendary status when he audaciously wagered against the U.S. housing market in 2008. That turned out to be the right call, and some traders may fear another 2008-style crash based on the valuations of certain AI-focused technology firms.
As fears of an AI bubble and crash mount, Burry’s short-AI bet is garnering a lot of attention on social media. At the same time, sensible investors should think twice if they’re considering a short position against two of today’s most popular AI stocks.
To put it mildly, the long-AI trade has done well over the past few years. We can look at a couple of charts to see the size of the gains.
The poster child of AI-sector expansion is, of course, the almighty NVIDIA (NASDAQ:NVDA). A designer of graphics processing units (GPUs) that are sufficiently power to handle AI applications, NVIDIA is a darling of the financial markets in the 2020s.
It’s amazing to discover that NVDA stock traded at $13 five years ago. Fast-forward to November 2025, and NVIDIA shares are up by more than 1,300% and trade near $200.
Then there’s Palantir Technologies (NASDAQ:PLTR), the cybersecurity software firm that successfully integrated AI tech. Short-term traders didn’t react positively to Palantir’s just-released quarterly results, but the long-term trend is still to the upside.
Palantir stock’s 1,700% ascent over the past five years has been breathtaking. Along the way, every price dip got bought up and, without a doubt, many short sellers lost their shirts betting that PLTR stock would collapse.
If any two stocks could properly represent the magnitude of the long-AI trade, it would be NVDA and PLTR. These two names rose to prominence due to the emergence of the generative AI trend that kicked off in 2022.
Burry was 100% right to be skeptical of the 2008 real estate bubble. So, does Burry see a similar bubble with the rapid valuation expansion of AI stocks in 2025?
A recent financial filing seems to suggest that Burry may be preparing for a deep correction in certain AI-focused stocks this or next year. According to a Form 13-F filing, Burry’s hedge fund, Scion Asset Management, held put options on 1 million NVIDIA stock shares and on 5 million Palantir Technologies shares.
Oftentimes, buying a put option is effectively a bet that a stock’s price will go down. It can be a similar strategy to short-selling a stock. If Burry’s hedge fund still owns those put options, he’s probably need NVDA and PLTR stocks to decline in order to profit on those positions.
And they’re sizable positions, by the way. Per the Form 13-F, the approximate dollar values for the put-option positions are $186.58 million for NVDA and $912.1 million for PLTR.
Due to Burry’s renown and the large position sizes, Scion Asset Management’s put-option trades are gaining traction on social media. The amateur analysts on Reddit are out in full force, with one commentator apparently keeping a close watch on the “frothy market.”
Meanwhile, an X (formerly Twitter) poster remarked that Burry is “betting against the two names that define the AI era.” We can’t read Burry’s mind, but his NVIDIA and Palantir option positions speak for themselves and appear to indicate a short bias against the AI boom.
Bear in mind, not everyone is ultra-confident about Burry’s put-option positions. One Redditor declared, “This could and probably means nothing, as he’s been wrong plenty,” while an X poster proclaimed, “This guy is no Warren Buffet. He was right one time in 2008 and has been a doomer ever since.”
“Doomer” or not, Burry might have valid reasons to hold put-option positions against large-cap AI stocks. Valuations appear to be stretched as NVIDIA’s trailing 12-month price-to-earnings (P/E) ratio is 57.41x while Palantir’s is an eye-watering 439.45x.
But then, similar bearish arguments based on valuation concerns could have been made a year or two ago, yet the NVDA and PLTR share price climbed nonetheless. As the old John Maynard Keynes quote reminds us, the “[m]arkets can remain irrational longer than you can remain solvent.”
That’s a great quote to keep in mind if you feel that AI stocks are irrationally valued in 2025. Besides, Burry’s hedge fund can afford to take a multimillion-dollar loss on his put-option positions, whereas your account might not be able to handle large-scale losses.
Therefore, it’s fine to take an interest in the trades of a legendary investors like Burry, but you don’t have to implement all of his strategies. For now, feel free to grab some popcorn, sit back, and enjoy the show as Burry’s bold short-AI-boom bets could make millions or crash and burn.
