“The Big Short” protagonist doubles down on AI crash bet: continues shorting NVIDIA and Palantir while buying software stocks
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“The Big Short” protagonist doubles down on AI crash bet: continues shorting NVIDIA and Palantir while buying software stocks
When others are greedy, he remains fearful.
Navigating Web3 tides with focused insightsAuthor: Claude, TechFlow
TechFlow Introduction: As the Nasdaq Composite Index hits successive all-time highs and NVIDIA’s market capitalization approaches $5.3 trillion, Michael Burry—the hedge fund manager who rose to fame by shorting subprime mortgage-backed securities during the 2008 financial crisis and served as the real-life inspiration for the film *The Big Short*—is doubling down in the opposite direction.
He not only maintains bearish positions on NVIDIA and Palantir but has also expanded his short exposure to semiconductor ETFs and Nasdaq-100 ETFs, while simultaneously buying traditional software stocks battered by AI-driven narratives—constructing a comprehensive “AI bubble repricing” portfolio.
The Nasdaq Composite Index hit a new record high this week, closing at approximately 26,247 on May 8, while the S&P 500 also reached an all-time high that same day. The Philadelphia Semiconductor Index (SOX) has surged roughly 55% since the start of Q2. NVIDIA’s share price is nearing its all-time high of $217.80, with its market cap exceeding $5.2 trillion. The AI-fueled tech stock rally is at its most feverish stage.
Yet precisely at the market’s peak exuberance, one investor renowned for contrarian bets is aggressively ramping up exposure in the opposite direction.
According to a May 7 report by *Foreign Policy Journal*, Michael Burry—the hedge fund manager whose prediction of the 2008 subprime crisis inspired the film *The Big Short*—disclosed his latest portfolio adjustments this week in his Substack newsletter, “Cassandra Unchained.”
He not only maintains bearish options positions on NVIDIA and Palantir but has added a direct short position in Palantir and expanded bearish bets on the Semiconductor ETF (SOXX), the Nasdaq-100 ETF (QQQ), and Oracle.
At the same time, he has begun purchasing a group of traditional software companies sidelined by the AI boom—including Adobe, Autodesk, Salesforce, and Veeva Systems—arguing their share price declines stem from panic selling rather than deteriorating fundamentals.
Thus emerges a complete “Big Short” hedging portfolio, built around the core logic of shorting AI beneficiaries and going long on AI casualties.
Starting from the $1.1 billion bet last November
Burry’s short positioning in the AI sector began in Q3 2025.
At that time, the 13F filing from his hedge fund, Scion Asset Management, revealed he had purchased put options on Palantir with a notional value of approximately $912 million and put options on NVIDIA with a notional value of roughly $187 million. When this news broke in November last year, it sent shockwaves through markets and pressured both Palantir’s and NVIDIA’s share prices.
Burry later clarified on X (formerly Twitter) that his actual cash outlay was about $9.2 million—not the widely reported $912 million, which reflects the notional value of the options contracts, a figure nearly 100 times larger. This distinction is critical: Notional values reported in 13F filings are frequently misinterpreted as actual invested capital, thereby grossly exaggerating trade size.
Shortly after the disclosure, Burry announced the closure of Scion Asset Management and the termination of its SEC registration, ending his career managing external capital.
He then transitioned to operating as a private investor and launched the Substack newsletter “Cassandra Unchained” (a reference to Cassandra, the Greek mythological prophetess whose truths went unheeded), where he continues publishing market analyses.
Palantir short already profitable—but Burry says it “hasn’t fallen enough yet”
In terms of realized returns, Burry’s Palantir short position is currently in the black. Palantir’s share price has declined from roughly $161 at his entry point to about $137 today—a drop of approximately 34% from its 52-week high of $207. Despite just reporting stellar Q1 2026 results (revenue up 85% year-on-year), Palantir’s stock fell following the earnings release.
Burry has not taken profits. According to his Substack disclosure, he currently holds put options expiring in December 2026 with a strike price of $100, as well as puts expiring in June 2027 with a strike price of $50—implying he expects Palantir’s share price to fall more than 60% from current levels over the next year. In his post, he explicitly stated Palantir’s fair valuation lies only in the “single digits to low double digits.”
In April, Burry published a Substack post claiming Anthropic is “eating Palantir’s lunch,” noting that this AI safety firm’s revenue growth rate has already surpassed an annualized $30 billion, and that its more user-friendly, lower-cost AI integration tools are displacing Palantir’s complex enterprise deployment solutions. Within a week of the post’s publication, Palantir’s share price dropped 13.7%. Burry subsequently deleted the post. Dan Ives, an analyst at Wedbush, dismissed the claim as “fictional narrative,” while Palantir CEO Alex Karp previously publicly expressed his “inability to understand” Burry’s short thesis.
NVIDIA short remains underwater—but Burry stands firm on “AI = Bubble”
Compared to his successful Palantir short, Burry’s position on NVIDIA tells a very different story.
NVIDIA closed at approximately $215 on May 8—near its all-time high of $217.80—and now commands a market capitalization of about $5.3 trillion. Reports indicate Burry holds NVIDIA put options with a $110 strike price expiring in December 2027—currently deeply in the red. Yet he has not reduced his position; instead, he recently added further exposure.
Burry’s core rationale for shorting NVIDIA is “overinvestment in AI infrastructure.” In his first Substack article last November, he compared the current AI investment frenzy to the late-1990s internet bubble and likened NVIDIA to Cisco at the time. Between 1995 and 2000, Cisco’s stock surged 3,800%, briefly making it the world’s most valuable company—only to plummet over 80% when the dot-com bubble burst.
Burry’s key arguments include: hyperscale customers such as Microsoft, Google, Meta, Amazon, and Oracle are extending GPU depreciation schedules to inflate earnings; he estimates this accounting practice will understate depreciation expenses by roughly $176 billion cumulatively between 2026 and 2028, artificially boosting industry-wide profits. Moreover, he contends that today’s massive capital expenditures on AI infrastructure rest on overly optimistic demand forecasts—mirroring telecom companies’ reckless fiber-optic cable deployments ahead of the 2000 crash.
This view triggered a direct rebuttal from NVIDIA. According to CNBC, NVIDIA privately distributed a seven-page memo to Wall Street sell-side analysts, systematically addressing each of Burry’s claims—with specific references to Burry’s X posts as points requiring correction. In the memo, NVIDIA stated its customers depreciate GPUs over four- to six-year periods based on actual useful life, and that early-generation products—such as the A100 launched in 2020—remain highly utilized today. Burry responded, “I’m not saying NVIDIA is Enron,” but reaffirmed his analysis.
Going long on AI-battered software stocks: a complete bubble hedge
Perhaps the most notable aspect of Burry’s recent portfolio adjustment isn’t the short side—but his long positions.
He has recently purchased shares of Adobe, Autodesk, Salesforce, Veeva Systems, and MSCI. These companies share two traits: solid underlying fundamentals, yet sharp share price declines driven by “AI disruption” narratives and forced selling by private credit funds.
Adobe is down roughly 30% from its 52-week high; Autodesk is down about 22% year-to-date. Both now trade at forward P/E ratios comparable to levels seen in 2018–2019.
In his Substack post, Burry explained he “does not believe technical pressure from private credit or software debt is sufficient to impact these stocks over the long term.” In other words, he believes markets have excessively punished companies branded “AI losers” while overhyping those labeled “AI winners”—and he is betting on a correction of this mispricing.
Viewed holistically—shorts and longs together—Burry has constructed a classic long-short hedge: If the AI bubble narrative bursts, high-valuation beneficiaries like NVIDIA and Palantir will be first in line for a correction, while unfairly beaten-down traditional software stocks stand to rebound via valuation recovery. Even in a broader market decline, this structure could still generate positive returns.
In his farewell letter to investors upon closing Scion, Burry candidly wrote: “My assessment of security valuations has been out of sync with the market for quite some time.” That sentence serves both as introspection and as a declaration of principle.
At the height of the AI mania, he chooses to stand alone—on the opposite side of the crowd.
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