Global Markets Slip as Michael Burry Bets Against AI StocksGlobal Markets Slip as Michael Burry Bets Against AI Stocks

Global markets edged lower this week after Michael Burry — the investor who famously predicted the 2008 financial crisis — revealed a $1.1 billion short position targeting major artificial-intelligence names. The disclosure showed Burry’s fund had taken large put options against Nvidia (Zorrox: NVIDIA.) and Palantir Technologies (Zorrox: PLTR), sparking a swift selloff across technology-heavy benchmarks including the Nasdaq 100 (Zorrox: NQ100.) and weighing on broader sentiment in the S&P 500 (Zorrox: SPX500.).

BURRY’S TRADE AND MARKET REACTION

Regulatory filings confirmed that Burry’s Scion Asset Management built roughly $1.1 billion in notional put exposure spread across Nvidia and Palantir, two of the biggest beneficiaries of the AI rally. The news hit just as valuations in the sector were flashing signs of exhaustion.

Palantir slid about 8 percent in early trading, while Nvidia dropped more than 4 percent, triggering a broader rotation out of high-multiple technology stocks. Analysts called it a reminder that even dominant AI players aren’t immune to profit-taking when momentum peaks. Burry’s online comment — “sometimes the only winning move is not to play” — reinforced the caution.

FRAGILITY IN THE AI TRADE

The pullback came after one of the most aggressive thematic surges in recent market memory. Nvidia has more than tripled this year, riding record demand for AI chips, while Palantir has soared on optimism around government and enterprise adoption of its AI-driven platforms.

Those gains left both names trading at valuations difficult to justify if earnings growth slows. Portfolio managers say Burry’s move crystalized what many had privately warned: the trade was over-owned and emotionally priced. Still, most see the retreat as a sentiment adjustment, not a fundamental break in the AI story.

MACRO BACKDROP AND GLOBAL RISK

The timing added weight. With the Federal Reserve signaling interest rates will stay “higher for longer,” equity valuations in growth sectors were already under pressure. Asian and European tech indices followed Wall Street lower, from chipmakers in Taiwan to cloud providers in Frankfurt. The correction exposed how globally synchronized the AI trade has become — and how quickly liquidity can drain when conviction cracks.

TIPS FOR TRADERS

• Track reaction in Nvidia (Zorrox: NVIDIA.) and Palantir (Zorrox: PLTR) around earnings — confirmation of slower growth could extend the downside.

• Watch the Nasdaq 100 (Zorrox: NQ100.) and S&P 500 (Zorrox: SPX500.) for signals of whether the de-risking remains isolated or turns broad-based.

• Monitor implied volatility in AI-linked options; sustained high levels would confirm institutional hedging.

• Use short-covering rallies to reset exposure — momentum may reverse fast once macro data or earnings surprise.

• Keep liquidity ready; if fear overtakes fundamentals, high-beta AI names could swing violently in both directions.