Michael Burry bets against AI stocks (www.bbc.co.uk)

Legendary investor Michael Burry has placed roughly $1.1bn in option bets that will pay off if shares of AI-linked firms—most notably Nvidia and Palantir—decline, a move he signalled on X with a warning about bubbles. The revelation intensified already frayed market nerves about an “AI bubble,” triggering a global tech sell-off: Japan’s Nikkei fell 2.5% (SoftBank plunged over 10%), Nvidia dropped close to 4% after hitting a historic $5tn valuation, and other chip names and suppliers (Samsung, TSMC) also slid. Even Amazon eased back despite its $38bn OpenAI-related deal, illustrating how stretched AI-driven valuations have become. For the AI/ML community, Burry’s wager and the ensuing market correction matter because they signal a potential pullback in capital and a re‑rating of companies heavily spending on AI R&D and infrastructure. Technically, Burry used put-like option structures to short equity exposure—an expensive but scalable way to profit from declines—highlighting investor preference for hedges against valuation risk. Analysts warn that firms with high AI spending but uncertain near-term returns may face pressure on funding, hiring, and hardware investment, while chipmakers and cloud providers could see volatility tied to shifts in demand for compute. Overall, expect a more cautious investment climate and closer scrutiny of AI ROI.