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Michael Burry, famous for his accurate prediction of the mid-2000s US housing bubble burst, has once again stirred the pot in the financial world. This time, his bet against Nvidia and his criticism of AI companies have made him a hot topic on social media.
What Happened: Burry’s recent actions may have played a role in last week’s stock market dip. The investor, notorious for his ominous crash and recession predictions, recently made a comeback on social media after a two-year break, issuing several warnings about a potential bubble in AI stocks.
According to the Business Insider report, Burry’s hedge fund, Scion Asset Management, revealed that it held bearish options on Nvidia (NASDAQ:NVDA) and Palantir (NYSE:PLTR), with a combined notional value of $1.1 billion at the end of September. Some market observers scoffed at Burry’s bets, particularly after Nvidia’s shares surged over 5% following its third-quarter earnings beat.
However, Nvidia saw its shares dip 3% by the market’s close on Thursday and drop another 1% on Friday.
This unexpected downturn pulled the entire stock market down, leading some to support Burry and his skeptical view of the AI boom.
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Despite the market’s reaction, Burry has not verified whether he holds Nvidia puts or made a profit from Thursday’s sell-off. His bet against Palantir, whose stock has plunged 25% since November 3, has also been lauded.
Why It Matters: Michael Burry’s predictions have historically held weight in the financial world, given his accurate forecast of the 2008 financial crisis. His recent bet against Nvidia and critique of AI companies have not only stirred up social media but also potentially influenced the stock market.
This highlights the significant influence that prominent investors can have on market trends and investor sentiment.
The market’s reaction to Burry’s moves underscores the ongoing debate about the sustainability and valuation of AI companies.
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