The Motley Foolยท2025-11-15 15:33Core Viewpoint - Michael Burry has taken a short position against Nvidia and Palantir, suggesting a potential correction in the AI sector due to overvaluation concerns [3][4][19]. Company Summaries Nvidia - Nvidia has been a leader in high-performance chips, particularly in the AI space, with a current price-to-sales (P/S) multiple of 29, which is considered high compared to historical standards [11][14]. - Despite record revenue and profit generation, there are concerns about Nvidia's valuation and increasing competition from companies like Advanced Micro Devices and Broadcom [13][15]. - The stock's performance is closely tied to the ongoing demand for AI infrastructure, with significant investments from major companies like Microsoft and Meta Platforms [22][23]. Palantir - Palantir has seen a remarkable 224% increase in its stock price over the last year, but its P/S multiple of 124 is significantly higher than its peers, indicating potential overvaluation [6][8]. - The company is expected to continue securing business in both public and private sectors, despite the current frothy valuation [24]. - Burry's short position may reflect concerns that Palantir's stock is due for a pullback, although the long-term outlook remains positive [24][25]. Industry Insights - The AI sector is experiencing a surge in investment, with hyperscalers increasing their capital expenditures on AI infrastructure projects [20][22]. - Historical data suggests that high valuations, as indicated by the Shiller CAPE ratio and the Fear & Greed Index, often precede market corrections [16][17]. - There is a debate on whether the current enthusiasm for AI represents a bubble similar to the dot-com era, with Burry's actions drawing parallels to past market behaviors [9][10][19].