Michael Burry Who Called 2008 Just Bet $1.1 Billion Against AI

Palantir dropped 7% despite earnings. 

Michael Burry, who called the 2008 housing crash, just put $1.1 billion short against two of tech's biggest names. 

Nvidia and Palantir are on the line.

Alex Karp, Palantir CEO, is not happy about it.

Here's what we know. 

Michael Burry's hedge fund, Scion Asset Management, filed paperwork showing put options worth $912 million against Palantir $PLTR ( ▲ 5.92% ) and $187 million against Nvidia $NVDA ( ▲ 2.19% ) . 

That's real money betting these stocks will drop.

But here's the thing. The market seems to agree with Burry, at least for now. 

Palantir $PLTR dropped more than 7% on Tuesday. 

Nvidia $NVDA fell nearly 2%.

Both got hit with what investors are calling "valuation concerns."

Let's back up. 

If you're not deep in tech stocks, Palantir might sound like something from a fantasy novel. It's not.

Palantir sells AI software to governments and big companies.

They help organizations make sense of massive amounts of data. The Pentagon uses it. So does the CIA. Big companies use it to spot patterns humans would miss.

The business is real. 

Palantir just reported earnings that beat expectations. 

They made $1.18 billion in revenue with earnings of $0.21 per share. Analysts only expected $1.09 billion in revenue and $0.17 per share.

So why did $PLTR drop if earnings were good?

YTD Return: 152.20%
Market Cap: $452.5B
P/E Ratio: 451.35

That P/E ratio is the problem. 

It means investors are paying over $400 for every $1 of profit Palantir makes. For context, a "normal" tech stock might trade at 20-30 times earnings.

Wall Street analysts are split. 

Some say Palantir is building the future of AI and deserves a premium price. 

Others say this is 1999 dot-com bubble thinking all over again.

One analyst put it bluntly: "The stock has run too far, too fast. Even if Palantir executes perfectly, the current price assumes perfection for years."

Alex Karp isn't just defending his company. He's defending the entire AI thesis.

He's got a point. If you believe AI will transform business and government over the next decade, then betting against the leaders in AI software and chips seems risky.

However, Burry made his fortune by being right when everyone else was wrong. 

His bet against the housing market in 2008 turned $100 million into $700 million.

Steve Eisman, the investor also known for predicting the 2008 financial crisis, considers AI the single biggest story in the market right now.Despite his bullish stance, he has "taken some risk down."

So, could history repeat itself? Or is it a refresh cycle?

You don't need to pick sides between Michael Burry and Alex Karp. But you should understand what's happening.

Burry isn't saying AI is fake or that Palantir's business is bad. 

He's saying $PLTR price got ahead of reality. That's a different argument.

Palantir could keep growing revenue by 30% a year and still see its stock price drop if investors decide they overpaid. 

That gap between business performance and stock price matters more than you might think.

Wall Street calls this "multiple compression."

Not whether Burry or Karp is right. That will play out over months or years.

Ask yourself: what am I actually buying when I buy a stock like Palantir?

At over 400 times earnings, you're not buying current profits. 

You're buying a belief about the future. You're betting Palantir will grow so much that today's price will look cheap in five years.

Maybe that will happen. Palantir's revenue is growing fast. 

Their AI software is getting adopted by more companies. The U.S. government keeps expanding its contracts with them.

But perfection is expensive. And the market just reminded everyone that even great companies can be overpriced.

Some analysts still show "extremely bullish" sentiment on both Palantir and Nvidia. They're not backing down. Neither is Burry. Neither is Karp.

This fight is just getting started.

Disclaimer: This analysis is for educational purposes only and should not be considered investment advice. Always do your own research before making investment decisions.

Trader Insights Media tracks thousands of companies every week using rigorous financial analysis.

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