Michael Burry’s warning about the 2025 stock market crash

The investment world is once again paying attention to Michael Burry, the legendary investor who predicted and profited from the 2008 housing market collapse. His latest portfolio moves, revealed in his 13F quarterly filing, have sent shockwaves through financial markets and raised serious questions about the sustainability of the current AI-driven stock market rally.

With around $1.1 billion bet against two of the market’s biggest AI stocks, Burry appears to be sounding the alarm about what he may see as the market’s next major bubble.

1. The investor who saw it coming

Michael Burry earned his place in financial history with his prescient speech on the subprime mortgage crisis. As the founder of Scion Capital, he was one of the first investors to recognize systemic problems in the real estate market.

He took massive short positions in mortgage-backed securities. His story was immortalized in Michael Lewis’ book “The Big Short” and the subsequent Oscar-winning film, in which Christian Bale described his contrarian investing approach and in-depth analytical methods.

What makes Burry’s investment decisions particularly remarkable is his ability to identify asset bubbles before they burst. He doesn’t follow the crowd and often takes positions that seem counterintuitive to prevailing market sentiment.

When Burry makes a significant decision, especially one as focused as its current positioning, institutional investors and retail traders take note. His investment philosophy centers on in-depth fundamental analysis and a willingness to exercise autonomy when his research contradicts popular narratives.

2. The latest revelation from the 13F filing

Scion Capital’s most recent 13F filing with the Securities and Exchange Commission revealed a stunning portfolio allocation that has caught the attention of market observers around the world. The filing reveals that Burry took significant put option positions in Nvidia and Palantir Technologies, two companies at the forefront of the artificial intelligence revolution.

The numbers are staggering in their scale and conviction. Burry purchased put options on one million shares of Nvidia stock, valued at approximately $186.6 million, and puts on five million shares of Palantir stock, valued at approximately $912.1 million. Together, these two positions represent approximately $1.1 billion in bearish bets, accounting for approximately 80% of Scion Capital’s entire portfolio. This is not a hedge or minor contrarian position: it is a concentrated bet that reflects a deep conviction about the future direction of the market.

3. Understand Burry’s bearish bet against AI fundamentals

“These aren’t the graphics you’re looking for. You can go about your business.” – Michael Burry X Post November 3, 2025.

These are the fundamental AI sector charts that Michael Burry shared in his article X, on which he based his bearish put option bets.

Put options give the holder the right to sell shares at a predetermined price, making them profitable when stock prices fall. By purchasing put options rather than directly shorting the stocks, Burry limits his potential losses to the premium paid for the options while still retaining significant upside potential if those stocks experience sharp declines. This strategy provides leverage and defined risk, allowing it to exploit large positions without unlimited downside exposure.

The focus on just two AI titles is particularly notable. Palantir makes up about 66% of its portfolio, while Nvidia makes up about 13.5%. These aren’t diversified bearish bets across multiple sectors: they explicitly focus on companies that have become synonymous with the AI ​​investing thesis.

Palantir, which provides data analytics platforms and has positioned itself as a leader in AI software, and Nvidia, the leading producer of AI chips, have both seen their valuations soar as enthusiasm for artificial intelligence has swept the markets.

The filing also revealed that Burry maintains some bullish positions, including call options on Halliburton and Pfizer, as well as stock positions in Molina Healthcare, Lululemon and SLM Corp. This demonstrates that he is not simply bearish on the overall market, but rather has specific concerns regarding AI-related valuations.

4. AI bubble concerns

The comparison to previous market bubbles is hard to ignore. Both Nvidia and Palantir have seen extraordinary appreciation, driven primarily by the narrative surrounding AI. Nvidia’s stock price has risen several-fold as demand for its graphics processing units has exploded among companies building AI systems. Palantir has also benefited from its positioning as critical infrastructure for implementing AI in government and commercial sectors.

The valuations of these companies have reached levels that some analysts consider disconnected from traditional measures. As revenues and profits have increased, stock prices have often risen more quickly, increasing valuation multiples to levels that historically preceded corrections. The enthusiasm around AI has created an environment in which investors are willing to pay higher prices based on expectations of future growth rather than current fundamentals.

Burry likely sees parallels with previous tech bubbles, where revolutionary technologies created real business value but also led to unsustainable valuations. The dot-com bubble of the late 1990s demonstrated that transformative technologies do not automatically justify any price point. Many of the Internet companies that went bankrupt during this crash were working on legitimate business models, but their stock prices were too far ahead of reality.

5. What this means for investors

The crucial question for investors is whether Burry’s positioning represents a prophetic vision or premature pessimism. Its history deserves attention, but predicting market corrections is notoriously difficult, even for the most experienced investors. The market can remain irrational longer than investors can remain solvent, as the famous saying goes, and put options have expiration dates that add time pressure to the equation.

For individual investors, Burry’s decisions should not be interpreted as a directive to sell AI stock or rush to buy puts immediately. Its institutional fund operates with different constraints, time horizons and risk tolerances than most individual portfolios. What its positioning suggests is that serious investors with proven analytical capabilities see significant downside risk in AI valuations at current levels.

The broader implication is that market participants should carefully evaluate their exposure to AI-related investments and determine whether current valuations adequately reflect potential risks. This does not necessarily mean avoiding the sector altogether, but rather approaching it with caution and sizing positions. Recognizing that even transformative technologies can experience significant declines is crucial to successful long-term investments.

Conclusion

Michael Burry’s massive bet against Nvidia and Palantir represents one of the most significant contrarian positions taken by a high-profile investor in recent years. With approximately 80% of its portfolio positioned to benefit from the decline of these AI leaders, it is making a statement that cannot be ignored regarding its view of current market conditions.

Whether this turns out to be another prescient call that cements his legacy or another recent misstep from a legendary investor remains to be seen. What is certain is that its positioning serves as a warning that valuations in the AI ​​sector have reached levels that sophisticated investors consider unsustainable.

For market participants, this represents an opportunity to reassess their own assumptions and ensure their portfolios are appropriately positioned for the future. The investor who saw the housing crash coming is now warning about AI – and prudent investors would do well to at least understand why.