Global stock markets tumbled on Tuesday after reports that Michael Burry, the investor made famous by The Big Short, has placed a $1.1 billion (£840 million) bet against major artificial intelligence stocks, fuelling fears that an AI-driven market bubble may be nearing its peak.
The S&P 500 and Nasdaq Composite opened sharply lower in New York, while share indexes in France, Germany, and Japan each fell more than 1%, mirroring a global risk-off shift among investors.
Bitcoin also slid to its lowest level since June, extending recent declines across speculative assets.
Regulatory filings revealed that Burry’s hedge fund, Scion Asset Management, has taken short positions in chipmaker Nvidia and software company Palantir — two of the leading beneficiaries of the year’s AI boom. He stands to make significant gains if their share prices fall.
The disclosure coincided with an 8.3% drop in Palantir during premarket trading amid concerns that its third-quarter results signalled slowing momentum after a 400% surge over the past year.
Nvidia also reversed earlier gains, slipping 1.7%, while Amazon fell 1.3%, giving back some of Monday’s rally sparked by its $38 billion cloud deal with OpenAI.
Keith Buchanan, senior portfolio manager at Globalt Investments, said:
“The market’s been moving higher as warranted from an earnings standpoint, but at some point it seemed like it was positioning for a risk-off pull-back even on the slightest disappointment.”
Analysts warned that valuations across U.S. tech and AI names have become stretched, raising the risk of a correction reminiscent of the dot-com bust of 2000.
