For years, the artificial intelligence trade has felt untouchable. Earnings surprises, massive capital spending plans, and near-constant hype have turned a handful of companies into market heavyweights almost overnight. Now, one of Wall Street’s most famous skeptics is quietly positioning for a very different ending.
Michael Burry, the investor best known for spotting systemic excess before others take it seriously, has resurfaced with a blunt message: AI stocks are priced for perfection, and perfection rarely lasts. His focus is not on whether AI will matter long term, but on whether today’s valuations assume an economic reality that simply cannot hold.
Key Takeaways
Michael Burry is positioning against the AI trade through Nvidia and Palantir.
His concern focuses on valuation, capital intensity, and sustainability, not AI itself.
Markets remain unconvinced, highlighting the ongoing gap between skepticism and sentiment.
Rather than issuing loud warnings on social media, Burry has expressed his view through options positions tied to Nvidia and Palantir Technologies. Together, the two companies symbolize the AI boom, commanding a combined valuation measured in the trillions and exerting enormous influence over major stock indexes.
The size of Burry’s wager is modest relative to his reputation, but the implication is large. He is not forecasting a mild correction. His positioning assumes that today’s market narrative eventually collides with limits on infrastructure, capital efficiency, and earnings quality.
The problem he keeps coming back to
Burry’s concern is structural, not technological. In his view, the AI trade increasingly resembles past investment cycles where spending itself became the story. Massive investments in chips, data centers, and software licenses reinforce reported growth, but only as long as capital keeps flowing.
He has compared the current environment to earlier periods when markets confused future potential with present value, arguing that AI demand may be real but still insufficient to justify today’s assumptions. Once spending growth slows, even slightly, the math underpinning valuations can change very quickly.
This is where critics push back. Burry has been right before, but often long before markets reacted. As Michael Green has pointed out in the past, identifying excess is easier than predicting when investors finally stop rewarding it.
Why Palantir and Nvidia sit at the center
Burry’s skepticism takes different forms for each company. With Palantir, he has questioned the durability of revenue tied to government contracts, the competitive pressure from firms such as IBM, and compensation structures that dilute shareholder value. His view assumes that growth expectations normalize rather than expand indefinitely.
Nvidia, by contrast, represents the hardware backbone of the AI economy. Burry has raised concerns about customer concentration and financing dynamics involving major buyers like Oracle and Meta Platforms. He argues that aggressive purchasing today may be pulling forward demand rather than creating sustainable, long-term growth.
In his scenario, any slowdown in capital spending would ripple outward – hitting customers first, then suppliers, and eventually earnings forecasts.
Pushback, jokes, and disbelief
The market response has been dismissive so far. Both stocks have moved lower at times, but without the kind of decisive break that would validate Burry’s thesis. Nvidia has publicly rejected comparisons to historical accounting scandals, emphasizing transparency and economic strength. Palantir’s CEO Alex Karp has brushed off the criticism altogether.
Online, reactions range from serious debate to outright mockery. Burry is often teased for warning too early, too often. Yet his past success ensures that even skeptics pay attention when he reappears.
This is not a story about whether AI will change the world. That argument is already settled. The question is whether the market has priced in decades of success in just a few short years. Burry’s bet rests on the idea that capital cycles eventually turn, infrastructure spending slows, and enthusiasm fades faster than most expect.
