Wealthy American investor Michael Burry, known by his nickname «The Big Shorter,» has bet $1,1 billion against AI companies due to a market bubble.
Burry opened a short position on futures on shares of chip and graphics processor manufacturer Nvidia and data analytics software developer Palantir Technologies, whose business is closely linked to artificial intelligence firms. His shorting of these companies’ shares caused significant disruption. Palantir Technologies’ shares fell 24%, while Nvidia’s shares lost almost 16%.
Palantir Technologies’ stock price falls
A bearish trend was also observed in the «Magnificent Seven» market, which includes seven leading tech companies: Apple, Microsoft, Amazon, Alphabet, MetaTrader*, Nvidia, and Tesla. Executives at Morgan Stanley and Goldman Sachs believe the downward trend will continue, with these companies’ stocks declining by 10-20%.
The plunge in institutional stock prices stemmed from traders’ concerns about a bubble forming in the AI industry. It emerged that the aforementioned companies are investing or lending money to AI software developers, such as OpenAI, Oracle, and CoreWeave, who are then using the proceeds to purchase equipment and services, particularly from Nvidia and Palantir Technologies. This financial cycle is fueling a bubble that could soon burst.
*Meta company is recognized as extremist in Russia