NEW YORK / LONDON (IT BOLTWISE) – Global markets are experiencing a dramatic plunge after well-known investor Michael Burry placed a $1.1 billion bet against AI stocks like NVIDIA and Palantir. The development has led to a sell-off in technology stocks worldwide and raised questions about whether a major market correction is imminent.
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Global financial markets are under pressure after Michael Burry, known for his bet against the US housing market before the 2007 financial crisis, took a massive short position against AI stocks such as NVIDIA and Palantir. The news has led to a sell-off in technology stocks worldwide, with Nasdaq 100 futures trending lower in premarket trading. The Nasdaq Composite lost 2.04% yesterday, while Palantir and Reddit lost over 8% each.
The downward trend continued in Asia and Europe. The STOXX Europe 600 fell 0.46% in early trading before recovering slightly. Japan’s Nikkei 225 and South Korea’s KOSPI also posted significant losses. Bitcoin fell below the $100,000 mark but recovered slightly to $101,000. These developments raise questions about whether markets are headed for a 10% to 20% correction, as predicted by the CEOs of Goldman Sachs and Morgan Stanley.
Markets’ dependence on a small number of technology companies is a key factor in the current volatility. In the US, the so-called ‘Magnificent Seven’ contributed 80% of the S&P 500’s total return in October. The situation is similar in Asia, where six technology stocks in Hong Kong account for 50% of the Hang Seng’s returns. This concentration increases the markets’ vulnerability to sudden price declines.
Michael Burry’s decision to bet against NVIDIA and Palantir has caused a stir. Palantir CEO Alex Karp expressed anger at Burry’s actions, especially as his company reported a 63% increase in third-quarter revenue to $1.2 billion. Despite the growth, Palantir’s valuation remains controversial, with a market value of $450 billion compared to expected annual sales of $4.4 billion.
The question of whether Burry’s bet will be successful remains open. Analysts are divided on whether the current market situation represents a major correction or just temporary volatility. The coming weeks could be crucial in seeing whether markets stabilize or whether further turbulence lies ahead.
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