AI Bubble Fears: Burry Takes Aim at Nvidia

Michael Burry, the investor renowned for predicting the 2008 financial crisis, has again become a focal point in market discussions due to his bets against prominent AI companies like Nvidia and Palantir. Operating under the pseudonym "Cassandra" on X, Burry voiced concerns about an AI stock bubble shortly after rejoining the platform in late October. His firm, Scion Asset Management, disclosed its holdings of bearish put options on Nvidia and Palantir, collectively valued at $1.1 billion at the end of September. This move has drawn both criticism and support from market observers, with some dismissing his stance and others defending his contrarian approach.

Following Nvidia's third-quarter earnings report, Burry intensified his scrutiny, questioning the sustainability of the chipmaker's growth and its stock's valuation. While some initially mocked his bearish outlook after Nvidia's stock surged post-earnings, subsequent market volatility saw Nvidia shares decline, prompting a reassessment of Burry's position. The significant intraday swings in major indexes like the S&P 500 and Nasdaq Composite on Thursday, following Nvidia's downturn, led some to rally behind Burry's skeptical viewpoint, suggesting he might be prescient once again.

However, Burry's influence on the market slump is not isolated. Other factors, including analyst concerns about rising inventories and deferred revenues for Nvidia, alongside an uptick in US unemployment data, also contributed to investor caution. Despite the online furor, Burry has remained largely silent on the recent market events. His hedge fund has also terminated its SEC registration, closing it to outside investors, and he has indicated that a project titled "Unchained" may be released soon, adding to the intrigue surrounding his future market commentary.