Michael Burry, the legendary contrarian investor known for predicting the US subprime mortgage crisis, has taken one of his boldest positions yet — this time against the rapidly growing AI market frenzy. According to recent regulatory filings, Scion Asset Management built put-option exposures exceeding $1.1 billion on Nvidia and Palantir before deregistering from the SEC, which ended its obligation to publicly disclose holdings.

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Warnings Over Accounting and Over-Optimism Palantir CEO Pushes Back A Familiar Pattern for Burry

While 13F filings do not reveal the actual capital committed, one message is clear: Burry is positioning himself firmly against the AI trade at a time when the broader market remains overwhelmingly bullish.

Warnings Over Accounting and Over-Optimism

Burry has repeatedly warned that investors are underestimating the impact of accounting practices on reported profits for AI-driven firms. In a recent post on X, he criticised companies for manipulating earnings through depreciation adjustments.

“Understating depreciation by extending useful life of assets artificially boosts earnings — one of the more common frauds of the modern era,” Burry wrote.

He has also drawn attention to the massive capital expenditure in AI infrastructure, arguing that aggressive assumptions about the durability of chips and servers distort the true profitability of the sector. These concerns have led investors to question whether hyperscalers can maintain the earnings growth required to justify their soaring valuations.

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Palantir CEO Pushes Back

Burry’s shorts prompted a strong reaction from Palantir’s CEO, Alex Karp, who dismissed the bet as “bats** crazy.”* Karp insisted that both Palantir and Nvidia sit at the heart of AI commercialisation and are not overvalued in the way Burry suggests.

A Familiar Pattern for Burry

For those who have followed Burry over the years, this scepticism feels familiar. He famously began shorting subprime mortgage bonds in 2005, enduring years of losses before the 2007–08 financial crisis proved him right. That trade earned investors around $800 million, including $100 million personally for Burry.

Today, many seasoned investors are drawing comparisons between the current AI excitement and the dot-com bubble of the late 1990s. Even Bill Gates has commented that while AI is a historic technological breakthrough, the investment surge resembles bubble-like behaviour, with “tons of investments” likely to become dead ends.

A Stand Against Market Euphoria

Since Scion Asset Management is no longer required to disclose holdings, Burry’s full strategy remains unknown. However, his final revealed positions — combined with ongoing public criticism — strongly signal his belief that AI valuations, investor expectations, and aggressive accounting practices are on a collision course with economic reality.

Whether this turns into another Big Short moment or remains a bold contrarian stance is uncertain. But one thing is clear: Burry has once again positioned himself against one of the decade’s strongest market narratives, ensuring the debate over a potential AI bubble is far from over.

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