Michael Burry, the legendary contrarian immortalized in The Big Short, is at it again. This time he’s targeting three of the market’s most celebrated names: Tesla, Nvidia, and Palantir. Recent filings show massive bearish put positions on Nvidia and Palantir, while Burry has publicly called Tesla “ridiculously overvalued” and taken aim at its relentless shareholder dilution.The question now splitting Wall Street: Is this the beginning of a painful unwind in the AI trade, or just another head-fake from a famously early (and sometimes wrong) bear?
Burry’s Core ArgumentsTesla: Trades on “fantasy,” with annual dilution around 3.6% from stock-based compensation and no meaningful buybacks. Any new mega-compensation package for Elon Musk would only make it worse.
Nvidia & Palantir: Sky-high multiples (P/S ratios of 30x and 150x+, respectively) that assume flawless execution forever.
Broader AI sector: Echoes of late-1990s exuberance, where capital flooded into anything with “.com” (or now “AI”) in the pitch deck.
Dot-Com Similarities vs. Key DifferencesSimilaritiesNosebleed valuations
Narrative-driven pricing
Massive capital pouring into the theme (global AI capex already >$250B annually)
Critical DifferencesToday’s leaders are highly profitable with dominant market share
Interest rates are falling, not rising
AI is already embedded in enterprise and government workflows, not just speculative websites
The 2000 bust destroyed thousands of unprofitable companies, but survivors like Amazon and Cisco went on to create trillions in value. Today’s concentration in a handful of proven winners makes a total wipeout far less likely.What’s Next?Short-term (2026): Expect continued volatility. Any growth deceleration, margin miss, or macro scare could trigger 15–30% pullbacks—exactly the kind of moves that would make Burry’s puts profitable.Medium-term (2027–2030): If these companies execute—Blackwell chips ship in volume, Tesla nails autonomy, Palantir keeps taking share from legacy vendors—the upside remains enormous. History shows that the best tech compounds through corrections.Bottom LineBurry is probably early again, but he’s not irrational. Valuations are stretched, and gravity eventually asserts itself. That doesn’t mean a dot-com-style depression is coming—more likely a healthy reset that separates real AI leaders from the pretenders.For long-term investors willing to stomach big swings, Tesla, Nvidia, and Palantir still look like core holdings in the next technological wave. Just don’t expect the ride to be smooth.
Comments