The "Big Short" Strikes Again: Why Michael Burry Is Betting $10 Million Against Nvidia and Palantir

Michael Burry, the legendary investor immortalized in The Big Short, has officially taken a bearish stance on the two biggest darlings of the Artificial Intelligence boom: Nvidia (NVDA) and Palantir (PLTR). According to recent SEC 13F filings and insights from his newsletter, Cassandra Unchained, Burry’s Scion Asset Management holds put options against these tech giants with a notional value exceeding $1 billion.

But headlines only tell half the story. Burry isn’t just betting on a price dip; he is flagging a systemic risk in how the AI industry accounts for its explosive growth.

Here is a deep dive into Burry’s thesis, the numbers behind the bet, and what it means for your portfolio.

The Bet: $10 Million Wager on a $1 Billion Payday

While the "notional value" of Burry’s options sits near $1.1 billion, his actual exposure—the premium paid—is estimated at around $10 million. This is a classic asymmetric bet: limited downside (he loses the premium) with massive upside potential if the market crashes.

The Targets (as of late 2025):

For context, both stocks have seen meteoric rises, with Palantir up over 1,700% in the last five years. To Burry, this screams "exuberance."

The "Enron-Style" Accounting Red Flag

The most explosive part of Burry’s thesis isn't about AI technology itself—it's about accounting. Burry has drawn uncomfortable parallels between the current AI infrastructure build-out and the accounting scandals of the early 2000s.

The Depreciation Trap

Burry argues that "Hyperscalers" (major cloud companies like Microsoft, Meta, and Google) are artificially inflating their earnings by extending the depreciation schedule of their Nvidia chips.

Why this matters: By spreading the cost of these expensive chips over a longer period, companies report lower annual expenses and higher current profits. Burry estimates that if companies used a realistic 3-year timeline, their earnings would plummet, and their ability to keep buying Nvidia chips at the current pace would evaporate.

"Massively ramping capex through purchase of Nvidia chips/servers on a 2-3 yr product cycle should not result in the extension of useful lives of compute equipment. Yet this is exactly what all the hyperscalers have done." — Michael Burry

Palantir: The "Data-Transmission" Bubble

While his Nvidia thesis focuses on hardware cycles, Burry’s attack on Palantir is different. He views the company as overvalued based on fundamentals:

Palantir CEO Alex Karp has fired back, calling Burry "bats**t crazy" and accusing short sellers of trying to manipulate the market to stall American innovation.

Expert Perspective: Is It Enron or Cisco?

This is where investors need to be nuanced. In his newsletter, Burry clarified that while he sees accounting tricks resembling Enron, he views Nvidia itself as Cisco circa 2000.

The Cisco Parallel: In 2000, Cisco was the "plumbing" of the internet, just as Nvidia is the plumbing of AI. Cisco was a real company with real profits, but its stock price got ahead of reality. When the dot-com bubble burst, Cisco lost 80% of its value—even though the internet did change the world.

The Bottom Line: Burry isn't saying AI is a fake; he’s saying the financial scaffolding holding up these stock prices is flimsy. If the hyperscalers (Nvidia's customers) are forced to restate their earnings or cut spending, the revenue stream for Nvidia dries up overnight.

What This Means for You

Should you panic sell? Not necessarily. Burry has been early before (remember, he shorted the housing market years before it actually crashed).

Key Risks to Watch:

Conclusion

Michael Burry is betting that the AI market has detached from reality, fueled by accounting gimmicks and hype rather than sustainable cash flows. While the AI revolution is real, the stock prices attached to it may be a mirage.

Ask yourself: Are you investing in the technology of the future, or are you buying the "greater fool" theory at the top of a historic bubble?