Michael Burry, the investor renowned for predicting the 2008 housing crisis, disclosed a $1.1 billion short position against AI giants Nvidia and Palantir through put options in the third quarter of 2025. His fund, Scion Asset Management, allocated $912 million against Palantir and $186.6 million against Nvidia, representing 80% of its portfolio as of September 30.
The announcement triggered immediate sell-offs, with Palantir dropping as much as 16% intraday before closing down approximately 8%, despite beating Q3 earnings estimates and raising full-year guidance. Nvidia fell between 2% and 4%, contributing to the Nasdaq Composite's largest one-day percentage drop in nearly a month at roughly 2%. The decline spread globally, affecting Asian and European markets, with indices in Japan and South Korea recording sharp losses.
Burry's move highlighted extreme valuations, with Palantir trading at a price-to-earnings ratio of 254 (or 417 in some reports) and a price-to-sales ratio around 115-116, while Nvidia's P/E stood at 53 with a price-to-sales ratio of 28. Palantir CEO Alex Karp responded aggressively, calling the short 'batshit crazy' and vowing to outperform to undermine the bet.
The fallout extended beyond stocks, with Wall Street executives from Morgan Stanley and Goldman Sachs warning of potential 10-20% market corrections. In crypto markets, analyst Trader Deltan cited Burry's warning as accurate, predicting Bitcoin could drop 50% to $50,000, while the Crypto Fear & Greed Index hit 24—indicating 'Extreme Fear'—and CryptoQuant's Bull Score Index dropped to zero, levels not seen since early 2023.
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