MYworldfix

Famed investor Michael Burry, widely recognized for his astute predictions leading up to the 2008 financial meltdown, appears to be targeting the artificial intelligence industry with new bearish wagers. Filings from his investment firm, Scion Asset Management, indicate the acquisition of put options on two prominent AI companies, Nvidia and Palantir, suggesting a belief that their stock values may decline.

Scion Asset Management's recent quarterly 13-F filing revealed that the firm held put options on five million shares of Palantir and one million shares of Nvidia at the close of the third quarter. The cumulative value of these options was approximately $1.1 billion at the time of the filing. However, the specific expiration dates for these put options were not disclosed, leaving ambiguity as to whether these are short-term speculative plays or a longer-term bearish bet on the AI market. It is also important to note that the holdings reported in a 13-F filing reflect positions at the end of a quarter and may have since changed.

The news of Burry's positions elicited a strong reaction from Palantir CEO Alex Karp, who, in a Tuesday interview with CNBC, dismissed the idea of shorting Palantir and Nvidia as "bats*** crazy." Karp argued that these two companies are among the few genuinely profitable entities within the AI sector. He also suggested that investors engaging in such short positions might be attempting "market manipulation."

Burry's recent activity on social media platform X (formerly Twitter) has added to the speculation surrounding his views on the AI market. Last week, he posted an image of his character from the film "The Big Short," accompanied by the cryptic message: "Sometimes, we see bubbles. Sometimes, there is something to do about it. Sometimes, the only winning move is not to play." This post was interpreted by many as a warning about a potential AI bubble. Subsequently, Burry shared charts illustrating that cloud growth for tech giants like Amazon, Alphabet, and Microsoft was robust even before the AI boom, drawing parallels to the spending patterns seen during the dot-com era and the cyclical financing in the contemporary AI landscape.

Following reports of Scion's 13-F filing, Burry made another post on X, humorously stating, "Fake news! I am not 5’6” (not that there is anything wrong with that)," alongside a photo of himself with Christian Bale, who portrayed him in "The Big Short." This comment, coupled with his observation that "journalists reporting on 13Fs" were "none more fake," could imply that he was subtly refuting the interpretation that his firm was explicitly "short" the AI market. Scion Asset Management has not yet provided clarification on these put options or Burry's social media commentary.

Beyond Burry's individual actions, a growing number of market observers are expressing concerns about a potential AI bubble, drawing comparisons to the dot-com boom and subsequent bust at the turn of the century. These concerns are rooted in several factors, including the increasingly circular nature of financing within the AI industry, where companies like Nvidia act as investors, suppliers, and customers for other AI firms such as OpenAI. Additionally, the exorbitant costs associated with building and maintaining the data centers that form the backbone of the AI industry raise questions about whether tech giants can generate sufficient revenue to justify their massive infrastructure investments.