Michael Burry's 'Big Short' Intuition Shifts to AI Investments with Puts on Nvidia and Palantir
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Nov 04 2025
0mins
Source: SeekingAlpha
Michael Burry's Bearish Stance: Michael Burry's Scion Asset Management has taken bearish positions on Nvidia and Palantir, indicating caution towards the AI sector despite their significant market gains this year.
Market Performance and Concerns: Nvidia and Palantir have seen substantial increases in their stock prices, but recent premarket trading shows declines, prompting Burry to share charts that suggest a slowdown in cloud growth among major tech companies.
Cautionary Insights: Burry's social media posts reference historical market bubbles and caution investors against the current AI stock trends, likening his warnings to the character Cassandra from mythology.
Nvidia's Market Milestone: Nvidia recently became the first company to reach a $5 trillion market capitalization, reflecting its dominance in the AI hardware market, while Palantir continues to thrive through AI-driven contracts.
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Analyst Views on NVDA
Wall Street analysts forecast NVDA stock price to rise
41 Analyst Rating
39 Buy
1 Hold
1 Sell
Strong Buy
Current: 219.510
Low
200.00
Averages
264.97
High
352.00
Current: 219.510
Low
200.00
Averages
264.97
High
352.00
About NVDA
NVIDIA Corporation is an artificial intelligence (AI) infrastructure company. The Company is engaged in accelerated computing to help solve the challenging computational problems. Its segments include Compute & Networking and Graphics. The Compute & Networking segment includes its Data Center accelerated computing and networking platforms and AI solutions and software, and automotive platforms and autonomous and electric vehicle solutions, including software. The Graphics segment includes GeForce GPUs for gaming and personal computers (PCs), and Quadro/NVIDIA RTX GPUs for enterprise workstation graphics. Its technology stack includes the foundational NVIDIA CUDA development platform that runs on all NVIDIA GPUs, as well as hundreds of domain-specific software libraries, frameworks, algorithms, software development kits (SDKs), and application programming interfaces (APIs). Its platforms address four markets, which include Data Center, Gaming, Professional Visualization, and Automotive.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Historical Buyback Trends: Over the past year, Nvidia has authorized more than $25 billion in stock buybacks, demonstrating a consistent capital return strategy, particularly returning over $41.1 billion to shareholders through buybacks and dividends in fiscal 2026.
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- Infrastructure Supplier Dependence: While SpaceX's IPO garners attention, history indicates that infrastructure suppliers like Nvidia often achieve higher long-term returns, highlighting the market's ongoing demand for essential technology support.
- Clear Funding Utilization: The IPO proceeds will be directed towards expanding the Starlink network, enhancing Starship reusability, and designing data centers that could be deployed in orbit, all of which require substantial GPU support, thereby reinforcing the partnership with Nvidia.
- Expected Market Volatility: SpaceX stock is anticipated to experience typical post-IPO volatility, particularly after lock-up periods expire when insiders may begin to take profits, while Nvidia could benefit from the influx of capital due to its dominant position in AI infrastructure.
See More
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- SpaceX Valuation Challenges: SpaceX is expected to debut with a valuation of $1.75 trillion, yet its nearly 100 price-to-sales ratio significantly exceeds AI giant Nvidia's 24, indicating that high valuations may expose investors to greater risk of losses.
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- Partnerships Enhance Confidence: Collaborations with industry giants like Nvidia, Roche, Sanofi, and Bayer indicate potential in its technology; however, the lack of tangible results undermines market confidence in its financing capabilities and clinical progress.
- High R&D Costs: The time and costs associated with new drug development have risen sharply over the decades, and while Recursion aims to reduce these through its AI system, it currently lacks market-ready products and faces significant clinical and regulatory risks.
- Uncertain Clinical Trial Outlook: Although REC-4881 shows promise in treating Familial Adenomatous Polyposis, it remains in early-stage studies with no late-stage candidates, necessitating caution from investors regarding its future clinical advancements.
See More
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- Strong Earnings Coverage: With a diluted earnings per share of $2.39 reported in its latest quarterly results, Nvidia can easily cover a year's worth of dividend payments, showcasing its robust financial health and potential for continued growth.
- Yield Comparison: Although Nvidia's dividend yield stands at approximately 0.47%, which is still below the S&P 500 average of 1.1% and Microsoft's 0.87%, it surpasses Apple's 0.35%, indicating its competitive position among tech stocks.
- Preferred by Growth Investors: Despite the dividend increase, Nvidia remains primarily a growth stock, and investors should focus on the potential for capital appreciation rather than the relatively modest dividend income.
See More
Recursion Pharmaceuticals Leverages AI to Enhance Drug Development
- AI-Driven Drug Development: Recursion Pharmaceuticals is leveraging artificial intelligence to enhance drug development processes, aiming to shorten the time and costs associated with the drug discovery phase, although it has yet to demonstrate significant market results.
- Partnerships: The company has formed partnerships with industry giants such as Nvidia, Roche, Sanofi, and Bayer, which not only validate the potential value of its approach but may also facilitate access to non-dilutive financing.
- Clinical Trial Progress: Recursion's ongoing clinical trial for REC-4881 shows promise in significantly reducing polyp burden in patients with Familial Adenomatous Polyposis, although the drug still faces a lengthy approval process ahead.
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See More
