Michael Burry Shorts AI Giants: Will This Pullback End 6-Month Bull Run?
US stocks began falling in pre-market trading, with $Invesco QQQ(QQQ)$ and $SPDR S&P 500 ETF Trust(SPY)$ both down more than 1%. Does this sudden early-month drop feel familiar?
In August and September, the market also fell on the first trading day of the month. October was different — the drop came on Oct 10, when Trump once again threatened new tariffs.
Now it’s the second trading day of November:
Is this just a normal minor pullback, or the end of the six-month rally?
“The Big Short”, Michael Burry, is shorting $Palantir Technologies Inc.(PLTR)$ and $NVIDIA(NVDA)$ — two of the biggest names in the AI frenzy, making up 80% of his short positions.
Meanwhile, Wall Street’s veteran bull Ed Yardeni issued a rare warning:
“The S&P 500 may fall 5% before year-end — extreme bullish sentiment is flashing red.”
In the past seven weeks, retail bullish sentiment has exceeded the long-term average five times. The S&P 500 is up 37% in six months, a rally that has happened only five times since 1950.
💧Even more worrying: liquidity is drying up.
On Oct 31, US overnight secured funding rate (SOFR) jumped 18 bps to 4.22%, the largest one-day increase in a year. The Fed’s Standing Repo Facility (SRF) usage hit a record high, signaling tightening bank liquidity.
As one analyst put it:
“The Treasury has drained $700 billion of cash — like multiple rate hikes combined.”
Money in the system is shrinking, yet the AI dream burns even hotter.
Goldman Sachs trading desk noted that speculative themes like quantum computing, nuclear energy, and rare earths all plunged — “Today feels like everyone’s selling everything except the Mag 7, which are still holding up the index.”
Goldman also projects that the five AI giants (AMZN, GOOGL, META, MSFT, ORCL) will increase capital expenditures from $314 billion to $518 billion by 2026, up 65% in just 10 months. But suddenly, investors have pulled back from that 2026 optimism.
💭 Discussion:
Do you think this pullback is just a short pause, or a trend reversal?
Could Burry’s “short AI” bet become The Big Short 2.0?
With liquidity tightening and sentiment overheating, how much longer can U.S. stocks keep rising?
Leave your comments to win tiger coins~
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Michael Burry shorting Palantir $Palantir Technologies Inc.(PLTR)$ and Nvidia $NVIDIA Corp(NVDA)$ feels like a warning against AI mania, especially as even bullish voices like Ed Yardeni expect a 5% correction. A reset could actually be healthy after such a steep climb.
What really concerns me is liquidity. SOFR spiking and record Fed repo usage hint that money is tightening fast. If that continues while AI stocks stay hot, the risk of a deeper correction grows. For now, I’m cautious — once the Mag 7 start to slip, the real test begins.
@Tiger_comments @TigerStars
Burry has been shorting for a while already, even through this bull. He is a doomsday man so I generally ignore him except to look for opportunities to buy when he rocks the market.
I think US stocks will keep rising into mid 2026. Thus far, warnings of most companies have been good despite the fears of a recession. Inflation also looks like it is under control. Trump will likely continue to press the Fed to cut rates and this will help with their debt too. Cutting rates will definitely be a fail wind for the stock market so I do expect the market to rise into mid 2026 at least with multiple profit taking in between.
The recent pullback could be a healthy consolidation rather than the start of a downtrend, but the risk of a trend reversal is higher due to elevated valuations, liquidity strains, concentrated leadership, and the contrarian flag raised by Michael Burry
Massive put positions on Nvidia (NVDA) and Palantir (PLTR) signal a bet against AI-inflated valuations, with a potential sharp decline triggering broader volatility, making it not quite a 'Big Short 2.0”。。。
US stocks may rise further, but with increased volatility and limited upside unless a new catalyst emerges, and downside risk is significant
In short, balance is key : stay diversified, vigilant about valuations and liquidity, focus on hedging, and view the pullback as an opportunity to reposition rather than exit the market entirely
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@Huat99
@Snowwhite
Positioning in AI mega-caps was extremely crowded. When liquidity thins and funding costs edge up, even small flows can trigger sharp de-risking. So the tape feels painful — but structurally, earnings revisions have not cracked yet.
Burry’s short is a valuation duration protest. For it to become “Big Short 2.0”, you need two conditions simultaneously: a material liquidity shock and negative forward earnings revisions. We have only the first partially.
As long as corporate buybacks remain active, earnings guidance stays firm, and there is no sudden policy shift, the bull trend can still extend — but volatility will rise.
Once the government lock down ends and stability resumes about 2 weeks after the end date then these stocks will possibly start to rebound.
People just have to remember that many people in congress hold large positions in these companies so to ensure their growth they will do everything in their power to control the market and ensure these companies stocks rise again.
真正让我担心的，是流动性正在悄悄抽离。SOFR飙升、回购工具使用创纪录，这说明资金紧张已经蔓延到系统底层。当流动性开始收缩，哪怕企业盈利没变，估值也得重新定价。尤其是现在标普六个月涨了37%，这种节奏几乎不可能持续。
我不认为这次就是牛市终结，但应该是“第二阶段”的切换点——从狂热转向理性。从投资角度看，这种情绪冷却未必是坏事，反而能洗掉浮躁资金。AI主线依旧强劲，但接下来可能是分化行情：真正有盈利兑现的企业会继续走高，而靠故事支撑的，就要被现实修正。伯里这次，也许不是“大空头2.0”，但他提醒了我们——牛市不会永远靠情绪支撑。
This week’s investment related news is a macro story which had interest rates forecasts uplifted. This news event is in the past at this time. While there is further economic uncertainty, this would need to be a different source to impact markets further. While there is negative news in the us, there is still plenty of positive news stocks
I too believe the AI trend is unsustainable and that its current mass market application is an unreliable, energy guzzling rag and feels like a house of artificially propped up cards...
So many people are going to be caught holding the bag and burnt if the bubble really pops so soon