Michael Burry Shorting AI Stocks? The Truth Behind His Nvidia and Palantir Bet

Introduction:

Michael Burry — the legendary investor best known for predicting the 2008 housing crash — has reportedly made another big move. His latest 13F filing shows large short positions Against two of the most hyped artificial intelligence (AI) stocks in the market: Nvidia (NASDAQ: NVDA) and Palantir Technologies (NASDAQ: PLTR).

At first glance, it appears that Burry has gone all-in on betting against AI, with these two short positions making up nearly 80% of Scion Asset Management’s portfolio. But as with most things in investing, the reality might be more complicated than it looks.

 Summary

1. Michael Burry’s 13F Filing Explained
2. Why the Numbers Might Be Misleading
3. Understanding Bearish Option Structures
4. Palantir’s Valuation Concerns
5. Is Burry Really Shorting AI Stocks?
6. Should Investors Follow Michael Burry’s Move?

1. Michael Burry’s 13F Filing Explained

The SEC Form 13F gives investors a glimpse into what professional money managers are holding in their portfolios. In Burry’s case, the two standout positions are put options on Nvidia and Palantir — accounting for roughly 66% and 13% of his disclosed portfolio, respectively.

Put options give the holder the right to sell a stock at a certain price before a specified expiration date. When an investor buys puts, it usually signals a bearish outlook — a bet that the stock’s price will decline.

So, it’s easy to see why headlines are screaming “Burry is shorting AI.” But before jumping to conclusions, it’s important to understand what 13F filings don’t show.

2. Why the Numbers Might Be Misleading

On paper, it looks like Burry has committed 80% of Scion’s assets to shorting AI leaders. But that’s probably not the full story.

13F filings don’t reveal how those options are structured. They show only the long positions — meaning the options that have been bought — and not any that have been sold to offset risk. This leaves a huge gap in understanding the investor’s true exposure.

For instance, Burry could be using spread strategies, where he buys put options at one strike price and sells puts at another. This type of structure reduces risk and limits losses while still allowing him to profit if the stocks drop.

If that’s the case, Burry’s actual net short position may be much smaller than the filing suggests.

3. Understanding Bearish Option Structures

Options trading can be complex, and not all bearish trades mean outright pessimism. A common strategy known as a bear put spread involves:

• Buying a put option with a higher strike price.
• Selling a put option with a lower strike price.

This limits both the potential profit and the potential loss. Importantly, selling options doesn’t appear on 13F filings — only the long positions do.

So, when investors look at Burry’s 13F, they may see a big bearish bet on Nvidia and Palantir, but it might actually represent a hedged or limited-risk trade rather than an outright “big short” against AI.

4.  Palantir’s Valuation Concerns

Burry’s put position in Palantir Technologies has reignited debates about the company’s valuation. Palantir, a Leading data analytics and AI platform, trades at a sky-high price-to-earnings (P/E) ratio near 630 — signaling extremely high growth expectations from investors.

While Palantir has seen massive growth from its U.S. commercial customer base, recent earnings reports show that the rate of new customer additions is slowing down. That’s not necessarily a bad sign, but at such a lofty valuation, even small growth hiccups could send the stock lower.

This slowing momentum might be one reason why Burry is cautious on the stock — or at least hedging against a pullback.

5. Is Burry Really Shorting AI Stocks?

There’s little doubt that Michael Burry is skeptical of AI valuations, but it’s unlikely he’s making an “all-in” short bet against the sector.

The 13F only tells part of the story, and without knowing how his options are structured, it’s impossible to say just how bearish he really is. What seems like an 80% short position could, in reality, be a small, hedged, or market-neutral play.

Investors should also remember that Burry has a history of being early — sometimes by years — when spotting market excesses. His bearish views on AI might not immediately pay off, especially given the ongoing enthusiasm around artificial intelligence and machine learning technologies.

6. Should Investors Follow Michael Burry’s Move?

Copying famous investors’ trades is rarely a good idea, especially when the details are incomplete. The 13F filings are backward-looking and don’t show real-time positions, entry prices, or hedges.

While it’s wise to note what smart investors like Burry are doing, each individual should base investment decisions on their own goals, time horizon, and risk tolerance. AI stocks like Nvidia and Palantir may be expensive, but they’re also key players in one of the fastest-growing tech revolutions.

Frequently Asked Questions

Q1: Is Michael Burry really shorting AI stocks?
A1: Yes, his 13F filing shows put options on Nvidia and Palantir, which suggest a bearish stance. However, the actual exposure may be smaller than it looks due to hedging strategies not visible in the filing.

Q2: What does it mean when an investor buys put options?
A2: Buying put options gives the investor the right to sell a stock at a certain price. It’s generally a bet that the stock’s price will go down.

Q3: Why is Palantir considered overvalued?
A3: Palantir has a very high P/E ratio (around 630), reflecting massive growth expectations. Any slowdown in customer growth or earnings could make the valuation difficult to justify.

Q4: Should I short AI stocks like Michael Burry?
A4: Not necessarily. Shorting is risky, especially in a strong bull market for AI. Investors should conduct their own research and consider long-term fundamentals before making any move.

Conclusion

Michael Burry’s reputation as a contrarian investor means his trades always attract attention. But his latest 13F filing may not be the “massive short” against AI that headlines suggest.

Given the complexity of options and the lack of full transparency in 13F disclosures, Burry’s real strategy might be far more nuanced — possibly a hedge, not a high-conviction short.

For regular investors, the takeaway is simple: don’t blindly copy institutional trades. Understand the full picture, diversify your investments, and focus on long-term fundamentals — not just famous names or viral news.