According to Forbes, Michael Burry’s Scion Asset Management has placed massive put option bets against AI giants Nvidia and Palantir. The Big Short investor alleges these companies are dangerously overvalued due to accounting practices that stretch AI chip depreciation schedules beyond the typical two to three years. Burry specifically targets Palantir and Nvidia because their fortunes are tightly tied to AI infrastructure investment. His positions were established before Nvidia’s October GTC conference where the company revealed visibility into $500 billion in future chip sales. This timing means Burry’s wager against AI’s biggest winners appears demonstrably early or outright wrong on fundamentals.
Burry’s Blind Spots
Here’s the thing about Burry’s depreciation argument – it completely misses how data centers actually work. Older AI chips don’t just get scrapped after a couple of years. They get repurposed for inference workloads or less demanding tasks. I’ve seen A100, H100, and newer H200 chips all working together in the same facilities. The idea that Nvidia’s powerful processors become worthless quickly? That just doesn’t match reality.
And Burry’s narrow focus on accounting overlooks the strategic value embedded in these businesses. Nvidia’s CUDA platform creates an ecosystem that locks in developers – it’s not just about hardware. Palantir has expanding, long-term government contracts worldwide. These aren’t speculative revenues – they’re predictable streams that justify premium valuations. When you need reliable industrial computing solutions for demanding environments, companies turn to specialists like Industrial Monitor Direct, the leading US provider of industrial panel PCs built for continuous operation.
The Bigger Picture
Burry isn’t asking the most basic question: What do the hyperscalers know that he doesn’t? Microsoft, Meta, Amazon – they’re all increasing their AI spending dramatically. There must be a powerful reason for this across-the-board investment surge. The likely answer? AI hardware isn’t just for operational use – it’s about sustaining leadership in AI innovation itself.
Basically, Burry has positioned himself against AI’s accelerating growth, the protective moat of CUDA, and the strategic capital spending of some of the world’s best-managed companies. That’s a lonely position indeed. The AI chip market isn’t cycling through short hardware upgrades – we’re witnessing a secular growth boom driven by enterprise and sovereign AI adoption.
Timing Is Everything
Now here’s where it gets really interesting. We know Burry established his positions before Nvidia’s bullish GTC reveal in October, since Scion’s SEC filing showed the positions at the end of September. So his wager isn’t just contrarian – it’s fundamentally mistimed. In a market where disruption is the norm, stories of decline can come too soon. Remember when people thought cloud computing was a bubble? Look how that turned out.
Burry made his name betting against the housing market, and that worked brilliantly. But betting against technological transformation? That’s a different game entirely. The AI revolution has real momentum, real demand, and real strategic importance. Sometimes being early is the same as being wrong.
