Palantir vs. Michael Burry: The High-Stakes Fight Over an AI Bubble
Palantir Technologies has become one of the market’s most polarizing names. The company’s artificial intelligence narrative has propelled it into the upper stratosphere of tech valuations, but its numbers no longer justify the altitude. Palantir’s latest quarter showed impressive growth of roughly 63 percent, proof that its data-driven platforms are finding traction in both government and commercial sectors. Yet the company trades at more than 300 times projected 2025 earnings, according to recent FactSet data cited by MarketWatch on November 3. At that level, even strong execution cannot easily sustain the price.
The problem is not that Palantir lacks a business case. It is that its valuation assumes perfection. When a stock is priced for flawless expansion, the room for disappointment becomes razor thin. Investors are no longer paying for growth potential; they are paying for a promise that must be delivered without delay or setback. Palantir’s revenue trajectory and public contracts keep the story credible, but the gap between its real performance and market expectations has grown dangerously wide.
Michael Burry, the investor famous for predicting the housing collapse, appears to agree. His hedge fund, Scion Asset Management, disclosed large put options against both Palantir and Nvidia in a filing dated September 30. The Palantir position alone covers about five million shares, with a notional value near nine hundred million dollars. In total, his wagers represent a direct challenge to the AI enthusiasm that has dominated this year’s market. To Burry, Palantir embodies what happens when optimism outruns arithmetic.
Burry’s move does not guarantee a crash. Options are time-bound bets that can expire worthless if the market holds up longer than expected. His position signals conviction, not certainty. What it does highlight is how fragile the balance has become. When the investor known for spotting bubbles takes aim at a symbol of AI euphoria, others start to reassess whether they are holding an opportunity or a trap.
The difficulty lies in timing. Predicting when a valuation like Palantir’s will collapse is almost impossible. Momentum can sustain inflated prices far beyond reason, especially when narratives like “AI transformation” continue to attract capital. As long as revenue growth remains visible and contract wins make headlines, investors may tolerate the valuation. But once sentiment shifts, the unwind could be swift and brutal. Stocks trading on hope often fall faster than they rose, because there is little fundamental support underneath.
If that correction comes, the scale of the drop could be devastating. A company valued at hundreds of times future earnings cannot easily absorb a slowdown in growth or a pause in government spending. Every missed quarter, delayed deal, or margin squeeze would carry multiplied impact. Those who bought the story for its promise may find themselves facing losses they never imagined possible.
For investors, the lesson is not to dismiss Palantir’s technology but to separate business strength from valuation risk. The firm may continue to expand, but the price already assumes that it will dominate its markets without interruption. When optimism becomes expectation, the downside becomes asymmetric. Timing the pop is nearly impossible, yet preparing for it is essential.
Palantir’s ascent captures the spirit of this AI-driven market: ambitious, inventive, and at times detached from financial gravity. Michael Burry’s bet is a reminder that gravity always returns, and when it does, it does not ask for permission.
Disclaimer:
All views expressed are my own and are provided solely for informational and educational purposes. This is not investment, legal, tax, or accounting advice, nor a recommendation to buy or sell any security. While I aim for accuracy, I cannot guarantee completeness or timeliness of information. The strategies and securities discussed may not suit every investor; past performance does not predict future results, and all investments carry risk, including loss of principal.
I may hold, or have held, positions in any mentioned securities. Opinions herein are subject to change without notice. This material reflects my personal views and does not represent those of any employer or affiliated organization. Please conduct your own research and consult a licensed professional before making any investment decisions.