'Big Short' Wagers $1-Billion Bet That 'AI Bubble' Will Burst

Michael Burry, the US investor who won fame from the movie ‘The Big Short’, has lodged a billion-dollar bet that the share price of chip designer Nvidia and AI data analysis company Palantir will fall, once the “artificial intelligence bubble” pops, according to a new report.

Burry has predicted that the AI sector, whose value has seen a big surge in value this year, appears to be one of many market watchers who believe investors have got carried away because of the enormous investment in data centres.

He posted charts on X (Twitter) on Monday, showing how “US tech capex growth is matching the tech bubble of 1999-2000” and how growth in cloud computer at major tech companies is allegedly slowing.

The report said Burry’s investment firm, Scion Asset Management, “has now bought $912m worth of ‘put’ contracts in Palantir and $187m of shares in Nvidia” – giving it the right to sell stock at a specified price within a certain period of time, so he can profit when their stock prices fall.

Such an outcome could be similar to Burry’s famous bet 20 years ago that the US housing market was about to crash, which happened two years later, because of a crisis in America’s mortgage-backed securities market.

Palantir has seen its stock shoot up by 400% over the last year, LBC said, noting that a report by the Massachusetts Institute of Technology in August warned that the vast majority of AI investments were yielding “zero returns” for business.

And OpenAI CEO Sam Altman had also voiced concern about investors getting “over-excited”.

The prices of the two popular stocks have already begun falling this week, it said, so – stay tuned.