"I might be early, but I'm not wrong!" Big short Burry goes against the market again, shorting the AI giants NVIDIA and Palantir Tech

The character Michael Burry from the movie "The Big Short" is once again standing against the mainstream consensus on Wall Street. This time, his targets are the AI giants supporting the bull market in U.S. stocks—NVIDIA and Palantir. Burry firmly believes that the market has detached from reality, and the AI industry is forming a massive bubble similar to the internet bubble. He has positioned himself in the options market with short positions, attempting to profit from the decline in the stock prices of these two tech giants.

The investor, who accurately predicted the subprime mortgage crisis, has significantly escalated his debate with the world's most valuable companies. Burry not only publicly disclosed his short positions but also fiercely criticized the internal memo released by NVIDIA in response to the doubts, stating that the document is filled with "straw man arguments" and reads "like a scam." He bluntly pointed out that the real risks are being obscured—amid the accelerated technological iteration, the massive capital expenditures of NVIDIA's customers face future asset write-down risks.

According to information disclosed on November 3, Burry is shorting these two companies by buying put options, with the current cost of this bet being approximately $10 million. If the market crashes dramatically as he expects, the potential return on this investment could exceed $1 billion.

"It's like a scene from a movie," Burry quoted his famous line from "The Big Short," "I may be early, but I'm not wrong." He acknowledged that he has previously entered the market too early during the internet bubble and the real estate bubble, but he believes that the current AI craze is akin to the "data transmission bubble" of the past. Currently, he is articulating this grand narrative to investors through his newly launched communication column "Cassandra Unchained," warning that the bubble's burst is just a matter of time.

Point-Counterpoint: The Memo Dispute and "Straw Man"

The focus of the debate has deepened from simple valuation issues to the underlying logic of accounting treatment and technological iteration. In response to the doubts, NVIDIA recently distributed a seven-page memo to analysts, emphasizing that its business is economically sound, its financial reporting is transparent, and denying allegations of "circular financing" and accounting fraud. NVIDIA argued in the memo that its customers typically set the depreciation period for GPUs at 4 to 6 years, which aligns with the actual useful life of the equipment.

However, Burry is not buying it. He refuted each point on Substack, stating that NVIDIA's response is a "disappointing" "straw man argument"—attacking points that were not raised Burry pointed out that as a chip design company, NVIDIA's own depreciation policy is irrelevant; his core concern lies with its customers (such as Microsoft, Meta, and other large-scale data centers).

Burry warned that NVIDIA's customers are extending the useful life of chips to 5 to 6 years for accounting purposes to beautify short-term profits. However, in reality, with the rapid iteration of AI technology, new chips may render existing hardware functionally obsolete as early as 2026 to 2028. He cited comments from Microsoft CEO Satya Nadella about slowing down data center construction as evidence, pointing out that overbuilding and technological iteration will lead to significant asset write-down risks in the future.

Michael Green, Chief Strategist at Simplify Asset Management, noted that Burry's biggest historical issue often lies in being "too early." Whether during the internet bubble or the real estate bubble, he has faced immense pressure for entering the market too soon. Burry responded on social media platform X by quoting a line from the character played by Christian Bale in the movie "The Big Short":

"It seems this will pay off. I may be early, but I'm not wrong."

Specific Short Logic Regarding NVIDIA and Palantir

Burry stated in a podcast hosted by writer Michael Lewis that NVIDIA and Palantir are "the two luckiest companies on Earth," but he has different yet interconnected short logic for both.

Regarding Palantir, Burry believes the company is overly reliant on stingy government contracts and that the compensation for executives is too generous. He also pointed out that Palantir is facing fierce competition from rivals like International Business Machines.

For NVIDIA, the world's most valuable company, Burry's concerns mainly focus on its customer relationships and accounting issues. He noted that there are complex issues between NVIDIA and clients like Oracle and Meta. Burry accused NVIDIA of supporting sales by funding customers to purchase its products, a practice similar to Enron's financial support for suppliers to buy its products. Burry warned that once the bubble bursts, the chain reaction of declining profits, shrinking stock prices, and reduced investments will severely impact NVIDIA's future sales.

Past Performance and Market Controversy

Although Burry gained fame for his performance during the 2008 financial crisis, many of his predictions of collapse over the past 15 years have not come to fruition. There is no shortage of ridicule on social media, joking that he "successfully predicted twenty times during the last two recessions."

On January 31, 2023, Burry posted urging followers to "sell" (SELL). Although Silicon Valley Bank collapsed two months later, the S&P 500 index has since risen by about 70%. Burry later admitted that this call was wrong, but he defended his record on X, stating that he had revised his views and suggested buying after the two bank collapses and the market downturn Currently, Burry is facing the risk of being "too early" again. As depicted in the movie "The Big Short," if he is correct about the AI bubble, he will reap huge rewards; if he misjudges or the timing is off, his short interest may become worthless within a few quarters