According to Fortune, Michael Burry’s Scion Asset Management disclosed a $1.1 billion short bet against Nvidia and Palantir through SEC filings. The revelation comes as tech stocks that drove 90% of the S&P 500’s October returns are getting hammered, with the Magnificent 7 alone contributing 80% of monthly gains. Global markets show similar concentration – in Hong Kong, six tech stocks account for 50% of returns, while in Taiwan, one stock drives more than half the index’s performance. Palantir just reported Q3 revenue of $1.2 billion, up 63% year-over-year, beating expectations despite its $450 billion market cap dwarfing expected annual revenues of $4.4 billion. The stock fell another 3% in overnight trading following the disclosure.
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The narrow market problem
Here’s the thing that should worry everyone – this isn’t just about Burry‘s bet. The entire global market rally is resting on a handful of tech stocks. We’re talking about a situation where if just six companies in Hong Kong or two in Korea stumble, entire national indices could collapse. That’s insane concentration risk. And Wall Street CEOs from Goldman Sachs and Morgan Stanley are already predicting a 10-20% correction. Basically, we’ve built this entire market recovery on what amounts to seven U.S. stocks and their international equivalents. What happens when they stop carrying the entire economy on their backs?
Burry’s track record
Now, everyone remembers Burry as the “Big Short” guy who predicted the 2007 financial crisis. But let’s be real – being right once doesn’t make you a prophet. The man has made plenty of wrong calls since then. Still, when someone places a billion-dollar bet against the market’s darlings, you have to pay attention. His timing is particularly interesting given that Palantir just crushed earnings expectations. The company’s U.S. commercial revenue grew 121% year-over-year, which makes Burry’s bet seem… well, let’s just say counterintuitive.
Karp fights back
Palantir CEO Alex Karp didn’t hold back on CNBC, calling the short “batshit crazy” and promising to “be dancing around when it’s proven wrong.” And honestly, he has a point. Palantir’s fundamentals look strong with explosive growth. But here’s the catch – at a $450 billion market cap, investors are pricing in perfection for years to come. Any stumble in that growth trajectory could trigger a massive revaluation. So while Karp’s outrage is understandable, the valuation math is pretty stretched.
What this means
We’re essentially watching a high-stakes poker game between one of history’s most famous contrarians and the AI boom’s biggest winners. The SEC filing shows Burry’s conviction, but conviction alone doesn’t pay the bills. What’s really concerning is the underlying market structure – when so few stocks drive everything, any major shift creates systemic risk. Whether Burry is right or wrong about these specific companies, his bet highlights just how fragile this entire tech-led rally has become. And that’s something every investor should be thinking about.
