Michael Burry, the investor of The Big Short fame, is betting against artificial intelligence.
Burry, who correctly called the 2008 housing market collapse, returned to X Thursday after a two-year hiatus to warn of an AI “bubble” with a series of cryptic messages and memes.
In his first post, Burry shared an image of actor Christian Bale portraying him in The Big Short and wrote, “Sometimes, we see bubbles. Sometimes, there is something to do about it. Sometimes, the only winning move is not to play.”
Four days later, Burry’s fund, Scion Asset Management, disclosed in a Securities and Exchange Commission filing that it bought puts – or bets that share prices will fall – on two AI giants: Nvidia and Palantir.
The fund purchased roughly $187.6 million in puts on Nvidia and $912 million in puts on Palantir, according to the filing.
Burry’s warning that “Sometimes, the only winning move is not to play,” is a nod to the movie WarGames, where an AI supercomputer runs thousands of simulations of nuclear war – and learns that each ends in mutual destruction, according to Business Insider.
The forecaster made several pop culture references while underlining his skepticism about the AI boom in his return, including changing his X banner to a still from Star Wars: A New Hope, seeming to hint that he sees himself as a Jedi fighting against the Empire.
On Monday, before his firm’s third-quarter portfolio update, Burry shared three images of charts that offered some insight into his bearishness toward the AI boom.
The first chart showed that growth has slowed for Amazon, Alphabet and Microsoft’s cloud-computing divisions.
The second revealed that the U.S. tech sector’s capital expenditures have surged thanks to AI’s popularity – similar to their spikes before the 2008 financial crisis and dot-com crash.
The third chart showed the circular dealmaking between several AI companies, including Nvidia.
Burry referenced the dot-com crash again in a later post, writing, “Move Along,” with an excerpt from a book about that bubble — and an image of a stormtrooper.
While the famous investor has made public calls about the market since The Big Short, he hasn’t always been right. He famously wrote on social media in January 2023 to “sell,” before adding two months later, “I was wrong to say sell.”
Even still, his words have had an impact on Wall Street as tech stocks took a nosedive Tuesday.
Palantir, which was the top-performing stock in the S&P 500 last year, had its worst day since August on Tuesday, with shares dropping 7.95 percent. Additionally, Nvidia shares fell 3.9 percent. Several other technology companies, including Oracle, Microsoft and Apple, were also trading down.
Palantir CEO Alex Karp blasted Burry’s move on CNBC’s Squawk Box on Tuesday.
“The two companies he’s shorting are the ones making all the money, which is super weird,” Karp said. “The idea that chips and ontology is what you want to short is bats*** crazy.”
“When I hear short sellers attacking what I believe is clearly the most important software company in America, therefore in the world, in terms of our impact...it just is super triggering,” he added.
“It’s crazy motivating,” he said. “Every time they short us, we are just like tripling down on getting the better numbers, in part honestly, to make them poorer.”
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