The 'Big Short' Guy Just Bet $1.1 Billion Against AI Giants—And Markets Are Still Absorbing It

Core Insights - Michael Burry disclosed a $1.1 billion short position against Nvidia and Palantir Technologies, leading to a sell-off in tech markets [1] Company Performance - Palantir's stock dropped as much as 16% before closing down approximately 8%, despite beating third-quarter earnings estimates and raising full-year guidance [2] - Nvidia's stock fell between 2% and 4% during the same trading session, but it did not drop below its 50-day benchmark, indicating stronger fundamentals [2][5] - Palantir trades at a price-to-earnings ratio of approximately 254 and a price-to-sales ratio of around 115, making it vulnerable to bearish pressure [3] Market Reaction - The sell-off triggered by Burry's position affected global markets, with significant declines in Asian and European indices, particularly in Japan and South Korea [3] - The Nasdaq Composite recorded its largest one-day percentage drop in nearly a month at roughly 2%, with all members of the "Magnificent Seven" AI-related stocks closing lower [2] Valuation Concerns - The current trading prices for both stocks are below the average of the last 50 days, raising concerns for technical analysts [4] - Burry's disclosure has injected volatility into the AI sector, making investors cautious about buying at high valuations [6] Broader Market Sentiment - Major Wall Street executives, including CEOs from Morgan Stanley and Goldman Sachs, warned investors to prepare for potential market corrections of 10% to 20% in equity markets over the next couple of years [7] - Deutsche Bank is reportedly exploring strategies to hedge its exposure to AI-driven investments in data centers [7] - Burry highlighted "circular financing" in tech, questioning the sustainability of reported growth in the sector [7]