{"id":506062,"date":"2025-11-09T14:00:30","date_gmt":"2025-11-09T14:00:30","guid":{"rendered":"https:\/\/cryptoslate.com\/?p=506062"},"modified":"2025-11-08T13:32:04","modified_gmt":"2025-11-08T13:32:04","slug":"michael-burrys-big-short-is-the-ai-bubble-bigger-than-bitcoin","status":"publish","type":"post","link":"https:\/\/cryptoslate.com\/michael-burrys-big-short-is-the-ai-bubble-bigger-than-bitcoin\/","title":{"rendered":"Michael Burry\u2019s big short: Is the AI bubble bigger than Bitcoin?"},"content":{"rendered":"<p><em>Welcome to\u00a0<a href=\"https:\/\/cryptoslate.com\/slate-sundays\">Slate Sunday<\/a>, CryptoSlate\u2019s weekly feature showcasing in-depth interviews, expert analysis, and thought-provoking op-eds that go beyond the headlines to explore the ideas and voices shaping the future of crypto.<\/em><\/p>\n<p>Michael Burry, the \u201cBig Short\u201d protagonist whose bet against the mortgage bubble made him a living legend, is back in the business of raining on parades. This time, instead of subprime debt, his sights are locked on Silicon Valley, specifically, the AI bubble he believes is about to pop.<\/p>\n<p>This week, Burry\u2019s hedge fund revealed a whopping <a href=\"https:\/\/fortune.com\/2025\/11\/04\/big-short-investor-michael-burry-nvidia-palantir-puts-alex-karp\/\" target=\"_blank\" rel=\"noopener\">$1.1 billion<\/a> in put options against the AI titans Nvidia and Palantir. For those less versed in Wall Street lingo, that means Burry is betting that the stocks will\u2026 well, go splat.\u200b<\/p>\n<p>Why is this important? Because when Michael Burry thinks there\u2019s a bubble, people listen (if not for investment advice, at least for the entertainment value). After all, for every housing-market Cassandra, there\u2019s a hundred Chicken Littles. But Burry is no stranger to calling out absurd market exuberance (and making bank while doing it).<\/p>\n<h2>\u2018Bats*** crazy\u2019 vs. billion-dollar bets: The Palantir perspective<\/h2>\n<p>Enter Alex Karp, Palantir\u2019s CEO, wielding a verbal flamethrower. Karp\u2019s response to Burry\u2019s big bet? The notion that anyone would short AI companies is utterly absurd. He <a href=\"https:\/\/www.cnbc.com\/2025\/11\/04\/karp-big-short-burry-palantir-nvidia.html\" target=\"_blank\" rel=\"noopener\">retorted<\/a>:<\/p>\n<blockquote><p>\u201cThe two companies he\u2019s shorting are the ones making all the money, which is super weird.\u201d<\/p><\/blockquote>\n<p>He didn\u2019t stop there, doubling down:<\/p>\n<blockquote><p>\u201cThe idea that chips and ontology is what you want to short is bats*** crazy\u2026 He\u2019s actually putting a short on AI.\u201d<\/p><\/blockquote>\n<p>Palantir\u2019s numbers do back up a certain bravado. The company upgraded full-year revenue forecasts after a record Q3 and posted 173% gains over the last year.<\/p>\n<p>Yet Wall Street\u2019s obsession with AI is a double-edged sword, and even as Palantir beats forecasts, its share price can tumble 8\u201310% in a single breath, all thanks to valuation jitters and the swirling specter of \u201cAI bubble trouble.\u201d\u200b<\/p>\n<h2>Nvidia\u2019s cycle: Virtuous or viscous?<\/h2>\n<p>As for Nvidia, CEO Jensen Huang had his own take, downplaying investor fears.<\/p>\n<p>\u201cI don't believe we're in an AI bubble,\u201d Huang <a href=\"https:\/\/www.bloomberg.com\/news\/articles\/2025-10-28\/nvidia-s-huang-works-to-convince-investors-there-s-no-ai-bubble\" target=\"_blank\" rel=\"noopener\">asserted<\/a> in a Bloomberg Television interview, immediately after announcing a slew of new partnerships and the company\u2019s projection to generate half a trillion dollars in revenue.<\/p>\n<p>Huang isn\u2019t fazed by the bubble talk; he\u2019s too busy selling the world\u2019s hottest chips and projecting a multi-trillion-dollar industry. If anything, the Nvidia CEO believes the U.S. isn\u2019t doing enough to develop AI, and its restrictive policy vis-\u00e0-vis China will ultimately hurt the world\u2019s number-one superpower. He ruefully <a href=\"https:\/\/www.reuters.com\/world\/asia-pacific\/nvidias-jensen-huang-says-china-will-win-ai-race-with-us-ft-reports-2025-11-05\/\" target=\"_blank\" rel=\"noopener\">told<\/a> reporters at the Financial Times\u2019 Future of AI Summit on Wednesday:<\/p>\n<blockquote><p>\u201cChina is going to win the AI race\u2026 we need to be in China to win their developers. A policy that causes America to lose half of the world's AI developers is not beneficial in the long term; it hurts us more.&#8221;<\/p><\/blockquote>\n<p>Still, if you peek under the hood, Nvidia\u2019s stock (which has soared more than 50% this year) slipped 3\u20134% intraday on November 4, on news of Burry\u2019s short.<\/p>\n<p>And some investors remain jittery, especially with looming U.S. chip export restrictions to China and the trillion-dollar question: Is momentum fueling monstrous valuations, or is it genuine demand?<\/p>\n<h2>AI bubble mania meets reality: Trillions on the table, triggers everywhere<\/h2>\n<p>Let\u2019s zoom out. Nvidia just became the world\u2019s first tech firm worth <a href=\"https:\/\/www.bloomberg.com\/news\/articles\/2025-11-02\/nvidia-is-worth-5-trillion-here-s-what-it-means-for-the-market\" target=\"_blank\" rel=\"noopener\">$5 trillion<\/a>. That\u2019s bigger than all the banks in the U.S. and Canada combined. The \u201cMagnificent Seven\u201d tech stocks (including Nvidia) now occupy a regal 35% of the S&P 500\u2019s entire market cap.<\/p>\n<p>AI investment has soared past $1 trillion a year, while consumer stocks like Kraft Heinz are getting trounced. As global capital markets expert, The Kobeissi Letter, <a href=\"https:\/\/x.com\/KobeissiLetter\/status\/1985051783031337121\" target=\"_blank\" rel=\"noopener\">pointed out<\/a>:<\/p>\n<blockquote><p>\u201cThere are 2 US economies: Rich vs Poor, and AI is the lifeline of it all.\u201d<\/p><\/blockquote>\n<p>Car repossessions are climbing. Wage growth is stalling. And Americans are carrying record levels of credit card debt, with interest rates hovering near historic peaks. Unless you count the influence of AI and data centers, America\u2019s real economic growth is barely limping along, clocking in at just 0.01% according to Harvard economist Jason Furman.<\/p>\n<p>Meanwhile, Wall Street\u2019s top performers are running laps around Main Street, which is still struggling to catch its breath. The gap between winner-takes-all tech stocks and everyday households paints a pretty stark picture of today\u2019s economy. If and when the AI bubble bursts, it\u2019s going to hit like a Tyson left hook.<\/p>\n<p>Macro analyst and goldbug Peter Schiff, never one to miss an opportunity to dunk on Bitcoin, is wholly pessimistic as ever. Not only does he believe that crypto is about to blow up, but he\u2019s <a href=\"https:\/\/x.com\/PeterSchiff\/status\/1985865493031317895\" target=\"_blank\" rel=\"noopener\">right up there<\/a> with Burry on AI:<\/p>\n<blockquote><p>\u201cThe losses that will be suffered by Bitcoin HODLers and crypto investors will be staggering. More money will be lost in this bubble than was lost when the dot-com bubble popped. But if this signals an aversion to risk in general, look out for the even bigger AI bubble to burst.\u201d<\/p><\/blockquote>\n<p>Yet the most poignant critic of the moment is Burry himself, betting 80% of his portfolio on the AI bubble. He <a href=\"https:\/\/x.com\/michaeljburry\/status\/1984067754270319052\" target=\"_blank\" rel=\"noopener\">mused<\/a> to his audience on Twitter:<\/p>\n<blockquote><p>\u201cSometimes, we see bubbles. Sometimes, there is something to do about it. Sometimes, the only winning move is not to play.\u201d\u200b<\/p><\/blockquote>\n<h2>Technicals, tension, and the trouble with timing<\/h2>\n<p>If the spectacle feels familiar, that\u2019s because it is. In the dot-com era, pet-food websites with no earnings became household names, only to crash harder than a piano from a fourth-floor window.<\/p>\n<p>Today, instead of dogs.com, it\u2019s chips and data lakes; \u201cchips and ontology,\u201d as Karp jibes, with RSI readings above 70, price-to-earnings ratios exceeding 200 for Palantir, and price-to-book rocketing past 69. Nvidia and Palantir are riding a wave of profitability, but also expectations that would make a seasoned gambler sweat bullets.\u200b<\/p>\n<p>The sell-off that followed Burry\u2019s disclosure was real: Palantir shares dropped nearly 9%, Nvidia shed over 3%, and the S&P 500 retreated alongside tech sector peers Oracle and Tesla. The sell-off bled into crypto as well, with <a href=\"https:\/\/cryptoslate.com\/why-bitcoin-lost-the-100000-floor-everything-that-happened-in-crypto-today\/\">Bitcoin briefly falling below $100,000<\/a> a coin for the first time since June.<\/p>\n<p>CNBC reported Karp\u2019s outrage, suggesting Burry\u2019s actions were bordering on market manipulation as much as macro pessimism. He seethed:<\/p>\n<blockquote><p>\u201cI think what is going on here is market manipulation. We delivered the best results anyone's ever seen\u2026 I mean, these people, they claim to be ethical, but you know, they're actually shorting one of the great businesses of the world.\u201d<\/p><\/blockquote>\n<h2>Big tech\u2019s bubble or a decade of dominance?<\/h2>\n<p>Meanwhile, OpenAI CEO Sam Altman has openly acknowledged that the AI market is likely in a bubble. He <a href=\"https:\/\/www.cnbc.com\/2025\/08\/18\/openai-sam-altman-warns-ai-market-is-in-a-bubble.html\" target=\"_blank\" rel=\"noopener\">told<\/a> reporters:<\/p>\n<blockquote><p>\u201cAre we in a phase where investors as a whole are overexcited about AI? My opinion is yes. Is AI the most important thing to happen in a very long time? My opinion is also yes\u2026 When bubbles happen, smart people get overexcited about a kernel of truth.\u201d<\/p><\/blockquote>\n<p>Still, he also argued that bubbles don\u2019t kill revolutions, and sometimes they birth the next economy.\u200b Wall Street isn\u2019t sure whether to clap or cringe. And Burry\u2019s short has gotten them nervous.<\/p>\n<p>Palantir, despite \u201cotherworldly growth,\u201d now has to deliver on 40\u201350% annual revenue expansion and 50% gross margins just to justify its price. The sector-wide rally is monumental, but a single tweet or earnings miss could knock out tens of billions in minutes.\u200b<\/p>\n<h2>The punchline: Everything\u2019s absurd; until it isn\u2019t<\/h2>\n<p>Burry\u2019s bearishness, Karp\u2019s swagger, Huang\u2019s angst; the AI bubble debate is a masterclass in financial melodrama. Are we witnessing history rhyming, or is tech simply flexing its muscles in a world desperate for new growth drivers?<\/p>\n<p>If you trust Burry\u2019s gut, there\u2019s pain ahead. If you prefer your tech with a heaping side of chips (the silicon kind), maybe this is just the beginning. Karp insisted:<\/p>\n<blockquote><p>\u201cI do think this behavior is egregious, and I\u2019m gonna be dancing around when he\u2019s proven wrong.\u201d\u200b<\/p><\/blockquote>\n<p>Either way, bubbles are only obvious after they burst. Until then, thank Michael Burry for keeping the punch bowl spiked (and the market narrative anything but dull).<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Welcome to\u00a0Slate Sunday, CryptoSlate\u2019s weekly feature showcasing in-depth interviews, expert analysis, and thought-provoking op-eds that go beyond the headlines to explore the ideas and voices shaping the future of crypto. Michael Burry, the \u201cBig Short\u201d protagonist whose bet against the mortgage bubble made him a living legend, is back in the business of raining on [&hellip;]<\/p>\n","protected":false},"author":230,"featured_media":506085,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[78326,77968,29,80230],"tags":[80713,80714,78928,78951,80711,79075],"post_folder":[],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v21.9 (Yoast SEO v21.9.1) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Michael Burry\u2019s big short: Is the AI bubble bigger than Bitcoin?<\/title>\n<meta name=\"description\" content=\"Michael Burry, famed investor in \u201cThe Big Short,\u201d is betting big on an AI bubble, launching $1.1 billion in puts against Nvidia and Palantir.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, 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