The legendary investor behind The Big Short has placed substantial put options on two artificial intelligence market favorites worth more than $1 billion combined.
Michael Burry, the hedge fund manager who gained legendary status for predicting the 2008 financial crisis as depicted in The Big Short, has taken substantial bearish positions against two of the stock market’s most celebrated artificial intelligence plays. His firm Scion Asset Management purchased put options covering 5 million shares of Palantir valued at approximately $912 million and puts for 1 million shares of Nvidia worth about $187 million, according to regulatory filings for the quarter ending September 30. These two short positions now represent 80 percent of Scion’s portfolio, constituting a major wager against the extremely popular technology sector.
Equity put options provide purchasers the right to sell stock at a predetermined strike price by a specified expiration date. Traders typically deploy such positions when expecting significant price declines. Burry’s 13F filing to the Securities and Exchange Commission arrived about a week ahead of the deadline, revealing his conviction that artificial intelligence stocks have become dangerously overheated. His skepticism toward the artificial intelligence frenzy manifested again in a social media post late Monday when he highlighted the sector’s circular capital expenditure patterns.
Portfolio reveals additional strategic bets for Burry
Beyond his artificial intelligence short positions, Scion maintains other significant holdings including a $153 million call option bet on pharmaceutical giant Pfizer and a $61.5 million call bet position on energy services company Halliburton. These bullish positions suggest Burry sees opportunities in more traditional sectors that have underperformed during the artificial intelligence boom. The contrast between his bearish technology stance and bullish positions elsewhere indicates a calculated rotation strategy rather than broader market pessimism.
Shares of both Nvidia, which manufactures artificial intelligence chips, and Palantir, an artificial intelligence focused software company, reached record highs on Monday. The stocks have surged 48 percent and 305 percent respectively over the past 12 months, riding unprecedented enthusiasm for artificial intelligence capabilities. However, numerous analysts have cautioned that Palantir appears particularly richly valued. The software group entered Monday’s earnings announcement trading at a 2025 price to earnings multiple exceeding 300 according to FactSet data.
Market responds cautiously to valuations
Despite delivering results that exceeded analyst forecasts, Palantir shares declined 4 percent in premarket trading on Tuesday. Nvidia shares also slipped fractionally, suggesting investor sensitivity to valuation concerns that Burry has now publicly embraced. The Scion Asset Management filing does not specify details of the puts purchased, but option market observers on social media identified large trades in out of the money contracts expiring later in 2026.
Such an extended timeline mirrors Burry’s famous bets against subprime mortgage assets before the 2007 and 2008 financial crisis. He recognized then that market dislocations might require considerable time to materialize, demonstrating patience that ultimately proved extraordinarily profitable. His willingness to maintain positions through periods of market momentum against him became a hallmark of his investment approach and contributed to his eventual vindication.
Apparent contradiction in recent messaging
Interestingly, Burry’s aggressive positioning appears to contradict statements he made just last week. In a social media post, he implied a stock market bubble existed but suggested that sometimes the only winning move is not to play. His latest regulatory filing reveals he is playing with considerable conviction, allocating the vast majority of his portfolio to these bearish artificial intelligence bets. The apparent reversal from advocating caution to taking massive directional positions raises questions about what developments might have changed his calculus.
Whether Burry’s latest big short proves as prescient as his mortgage crisis call remains to be seen. Artificial intelligence stocks have defied skeptics repeatedly throughout their remarkable rally, and betting against powerful momentum trends carries substantial risks. However, Burry’s track record and willingness to take contrarian positions when conviction is high ensures his moves receive serious consideration from market participants. As artificial intelligence valuations stretch toward historically extreme levels, his warning shot may resonate more loudly if fundamentals fail to justify current pricing.