Michael Burry Is Still Betting Against Palantir Even After Trump's 'Warfighting' Praise. AI Bubble Ready to Pop?

Why It Matters

If Palantir’s lofty multiples prove unsustainable, short sellers could reap sizable gains while broader AI‑focused portfolios face heightened volatility. The debate highlights the risk of overpaying for hype in a rapidly evolving technology sector.

Key Takeaways

• Burry holds June 2027 $50 puts and Dec 2026 $100 puts
• Palantir trades at 100‑235× earnings, far above 20× sector average
• Company earned $1.2 billion from U.S. government contracts in 2024
• Anthropic may control 73% of new enterprise‑AI spending, Burry claims
• AI bubble debate persists; Howard Marks warns against all‑in bets

Pulse Analysis

Michael Burry’s renewed short position on Palantir underscores a growing skepticism about the data‑analytics firm’s lofty valuation. While the company posted $1.2 billion in U.S. government revenue for 2024, its price‑to‑earnings multiples—ranging from 100 to 235 times—are starkly out of line with the AI sector’s average of roughly 20 times. Burry’s specific options strategy, holding deep‑out‑of‑the‑money puts through 2027, signals confidence that the market will eventually price in the risks tied to Palantir’s heavy reliance on low‑margin government contracts and intensifying competition from pure‑play AI firms like Anthropic.

The conversation around an AI bubble has broadened beyond Palantir, with veteran investor Howard Marks cautioning against unchecked optimism. Marks acknowledges AI’s transformative potential but points out the uncertainty surrounding long‑term profitability and the possibility that current infrastructure spending may outpace genuine demand. While hyperscalers such as Microsoft, Amazon, and Google enjoy robust cash flows, the valuation gap between them and newer AI‑centric companies raises questions about whether investors are pricing in future growth or merely chasing hype. This nuanced view suggests that not all AI exposure is equal; firms with diversified revenue streams and proven commercial AI applications may weather market corrections better than those dependent on government contracts.

For investors, the key takeaway is disciplined risk management. Burry’s bearish bet serves as a reminder that even high‑profile endorsements—like Trump’s praise of Palantir’s war‑fighting tools—do not guarantee sustainable upside. Portfolio managers should scrutinize earnings multiples, margin profiles, and competitive positioning before allocating capital to AI stocks. A balanced approach that blends exposure to established cloud giants with selective, fundamentals‑driven bets in emerging AI players can mitigate the downside while still participating in the sector’s long‑term growth trajectory.