LONDON (IT BOLTWISE) – Well-known investor Michael Burry has caused a stir with his recent bets against AI giants NVIDIA and Palantir. Despite the attention his disclosure attracted, Burry appears to be incurring losses on these speculative trades. His strategy, which relies on falling prices, could prove risky as the share prices of the affected companies remain high.
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Michael Burry, best known for his role in the 2008 financial crisis, has hit the headlines again. This time his attention is focused on the field of artificial intelligence, particularly on the companies NVIDIA and Palantir. Burry, who rose to fame by betting against the US real estate market, has now purchased put options on these two tech giants. These options are bets that companies’ stock prices will fall.
The reaction to Burry’s disclosure was immediate. Shares of NVIDIA and Palantir fell, adding to already existing concerns about high valuations in the AI sector. Palantir CEO Alex Karp reacted sharply to Burry’s bets, calling them “super weird” and “batsh– crazy.” However, despite these reactions, there are signs that Burry’s bets are currently in the red.
Analysts like Jon Najarian of Market Rebellion point out that NVIDIA and Palantir’s stock prices have risen since the third quarter. This means that the put options that Burry purchased may have lost value. Najarian estimates that NVIDIA would have to fall another 7% and Palantir 5% for Burry to at least bring its investments to zero. This shows that the timing of such bets is crucial and that even experienced investors like Burry are not immune to losses.
Interestingly, Burry disclosed his positions earlier than usual. Typically, hedge funds wait until the last minute to file their quarterly reports. This early disclosure could indicate that Burry wanted to warn markets about a possible rebound that could be triggered by reopening after a government shutdown. Still, it remains unclear whether Burry is still holding his positions, as he is known for getting in and out of trades quickly.
In a cryptic post on X, Burry recently suggested that sometimes it’s better not to trade when you suspect a bubble. This statement reflects his cautious stance towards the current market environment, which is characterized by euphoria and high valuations. Despite his past successes, Burry’s recent experience shows that identifying a bubble does not automatically lead to profits. The market has rebounded sharply since its warning to sell in early 2023, underscoring the challenges of predicting market moves.
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