URGENT UPDATE: Michael Burry, renowned for predicting the 2008 financial crisis, has raised alarms about a potential bubble in the artificial intelligence sector. Reports confirm that Burry’s firm, Scion Asset Management, has opened substantial option positions linked to Nvidia and Palantir, valued at over $1 billion. This move intensifies concerns surrounding the soaring valuations of AI companies as investor skepticism grows.
The warning comes amid increasing scrutiny from the Bank of England, which has cautioned of a “sharp market correction” when the AI bubble inevitably bursts. Burry’s actions are a stark reminder of the risks that accompany rapid market expansion, especially in a sector heavily reliant on speculative momentum rather than solid revenue forecasts.
Market reactions have been swift. Both Nvidia and Palantir have faced significant sell-offs as investors reassess their exposure to what many perceive as inflated valuations. Burry’s recent financial disclosures, covering activity through late September 2025, reveal that he has positioned himself against companies pivotal to the AI surge, signaling a readiness to challenge the prevailing market consensus.
Pat Gelsinger, former CEO of Intel, echoed similar sentiments, labeling the current state of the AI sector as bubble territory. Gelsinger warns that although a correction may occur gradually, the gap between investment and revenue generation could widen, raising critical questions about sustainability in the AI market.
As AI companies continue to dominate the market landscape, the debate over their valuations intensifies. Nvidia, having just secured a staggering $100 billion deal with OpenAI focused on leveraging Nvidia hardware, experienced a $220 billion surge in its share price, further fueling concerns about inflated expectations.
“AI-driven economic expansion will ultimately justify current valuations,” stated Palantir CEO Alex Karp, dismissing warnings of a bubble.
This stark divide in opinion between Burry and Karp illustrates the tension between optimism and caution in a rapidly evolving market. As Burry’s predictions loom large, investors are left to interpret the implications of his bearish stance.
With AI sales projected to reach nearly $400 billion by 2028, the current financial dynamics suggest that many companies are investing heavily in data centers and advanced technology, yet the long-term profitability remains uncertain.
As the situation develops, all eyes will be on Burry’s next moves and the broader market reaction. Will the AI bubble burst soon, or will it continue to expand? The answers may lie in the coming weeks as the sector transitions from rapid growth to tangible results.
Stay tuned for updates as this story unfolds. The stakes are high, and the implications for investors and the tech industry are profound.
