The Motley Foolยท2025-11-14 09:50Investment Strategy - Scion Asset Management, led by Michael Burry, made significant bets against AI companies Palantir Technologies and Nvidia in Q3 2025, purchasing 5 million put options on Palantir valued at $912 million and 1 million put options on Nvidia valued at $186.5 million [4][3] - Burry has been vocal on social media about his concerns regarding the tech sector, particularly highlighting the growth in U.S. tech capital expenditures nearing levels seen during the tech bubble [5] Company Analysis: Palantir and Nvidia - Concerns have been raised about the financial practices of major AI firms, with Burry suggesting that companies like Meta Platforms and Oracle are overstating earnings by extending the useful life of assets, potentially inflating earnings by 21% and 27% respectively by 2028 [6] - Despite the potential of Nvidia and Palantir, Burry emphasizes the importance of valuation, noting that Palantir trades at 268 times forward earnings, indicating a need for caution among investors [7] Company Analysis: Lululemon - Scion purchased 100,000 shares of Lululemon, valued at approximately $18 million at the end of Q3 2025, as the stock has declined 54% this year due to consumer inflation and competition [9][10] - Lululemon's management indicated that the removal of the de minimis exemption and increased tariffs will negatively impact gross margins by $240 million in fiscal 2025 and $320 million in fiscal 2026 [13] - The company has seen a 7% year-over-year increase in net revenue for the first half of 2025, but diluted earnings per share remained flat at $5.70 [13] Market Context - Lululemon's stock trades at about 13 times forward earnings, suggesting potential value, but there are doubts about the company's ability to recover fully in the near term [14] - The apparel market is facing challenges, with consumers less willing to pay premium prices for fitness apparel, impacting Lululemon's sales [10]