Michael Burry’s bet against the AI trade is finally paying off.

A fresh selloff in tech stocks has dragged down two of the three names the “Big Short” investor shorted, just as Wall Street starts to question how long the rally can hold.

Burry’s now-closed fund, Scion Asset Management, revealed put options on Palantir Technologies (NASDAQ:PLTR) and Nvidia (NASDAQ:NVDA) in its final filing last year. He has since said on Substack that he doubled the position and added bearish bets on Oracle (NYSE:ORCL), a semiconductor ETF and the Nasdaq-100.

Palantir has dropped about 32% from where it traded at the end of September. Oracle tells a messier story, cratering from a September peak near 345 to a February low around 135 before clawing back to roughly 205, still well below its high.

Nvidia remains the holdout. The chipmaker trades slightly higher since the filing, and Burry’s puts reportedly run into 2027, so that leg still has runway.

Why The Cracks Are Showing Now

Anthropic this week launched Claude Fable 5 and Claude Mythos 5 at $10 per million input tokens and $50 per million output tokens, twice the rate of Claude Opus 4.8 and tuned for the complex coding and knowledge work legacy enterprise software sells.

One Wells Fargo strategist called the end of subsidized AI pricing the most pressing threat to the rally.

Palantir sits in a group Burry calls the “tragic tier,” alongside Datadog (NASDAQ:DDOG), CrowdStrike (NASDAQ:CRWD) and Tesla (NASDAQ:TSLA), which he dubs its “Lord.”

He argues stock-based compensation across the basket turns about $42 billion in reported profit into negative $267 billion in true owner earnings.

Some investors have also grown wary of what they describe as circular financing, in which Nvidia reportedly backs cloud startups that then spend much of that money on its chips.

What Prediction Markets Say Next

Polymarket now puts the odds of the AI bubble bursting by year-end in the low 20s, up from as low as 10% in April.

After today’s inflation report kept headline prices elevated on energy costs, the same platform gives a 2026 Fed rate hike a 52% chance, up from 12% in January, while a US recession this year sits at 19%.

Burry is not alone in his caution. Ray Dalio has likened the AI boom to the dot-com era, and fellow “Big Short” investor Steve Eisman has said he is nervous about the sustainability of the rally.

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