Michael Burry vs. the AI Hype: I Think the AI Bubble has Finally Burst on November 4, 2025

I think we are currently at the top of the market…

A few years ago “AI” was the magic word that could make any stock chart go vertical. Well, that spell might be finally wearing off.

On November 4, 2025, two major things hit the tape:

  • Michael Burry — yes, the guy who called the 2008 housing collapse — revealed huge short positions against two of the most overhyped AI darlings: Nvidia ($NVDA) and Palantir ($PLTR).
  • The CEOs of Goldman Sachs and Morgan Stanley both warned that stocks could see a 10-20% correction within the next 12-24 months.

That’s like the market equivalent of a smoke alarm and a barking dog going off at the same time. You don’t have to panic, but you’d better look around.

Burry’s Back — and He’s Betting Big Against AI

Burry disclosed $1.1 billion worth of put options on Nvidia and Palantir. He’s calling out what many are too giddy to admit — that AI mania might have gone full-bubble.

Think about it: Nvidia has been treated like the only company capable of producing a GPU, and Palantir’s been marketed as the government’s secret AI oracle. Great stories, sure. But when valuations hit nosebleed levels, gravity eventually wins. Nvidia currently has a PE Ratio of over 50, while Palantir has PE Ratio of a whopping 400 plus.

And while Palantir’s CEO, Alex Karp, fired back by calling Burry’s bet “batsh*t crazy,” history isn’t on Karp’s side. Every bubble ends with CEOs telling you the skeptics just “don’t get it.”

Wall Street’s Own Are Sounding the Alarm

On that same day, both Goldman’s David Solomon and Morgan Stanley’s Ted Pick basically said, “Brace yourself.”

  • Goldman’s chief warned of a 10-20% pullback as stretched valuations meet economic reality.
  • Morgan Stanley’s CEO called an upcoming correction “healthy” and said investors should expect it.

When the people paid to keep the champagne flowing start telling you to slow down, it’s not business as usual. It’s risk management.

AI Euphoria Looks a Lot Like Dot-Com Déjà Vu

We’ve seen this movie before. The late ’90s had “internet” startups with no profits; 2020s have “AI-driven” companies with no cash flow.

Back then, companies would slap “.com” on their name and triple overnight. Now it’s “AI.” Every earnings call mentions it, every startup pitches it, and every investor thinks they’re holding the next trillion-dollar story.

The only difference? The hype cycle is running faster this time because social media amplifies everything. And this could also mean when AI stocks crashes it could become bigger than it was before.

Burry’s Move Isn’t About Timing — It’s About Warning

People love to argue that Burry’s always early. That might be true, but being early and being wrong aren’t the same thing. He wasn’t wrong about housing — just too soon for the crowd to see it.

His latest short is less about calling the exact top and more about flashing a giant “Slow Down” sign. It’s contrarian investing 101: when everyone’s convinced a sector can’t lose, that’s exactly when it’s most fragile.

If we are riding the AI rocket, this is our cue to check our seatbelts — and our allocations. We don’t have to sell everything and hide in bonds, but blind faith is not a strategy.

Ask yourself:

  • Do I actually understand how these companies make money, or am I just betting because everyone else is?
  • Are valuations justified by real earnings, or by vibes and future promises?
  • If these names dropped 20–30%, would I buy more — or panic-sell?

If your honest answer makes you uncomfortable, that’s your portfolio talking to you. Listen.

Correction ≠ Collapse. Or Does it?

Let’s be clear — a 10-20% correction doesn’t mean the world ends. It’s the market’s way of resetting expectations. The bank CEOs even called it “healthy.” But if this thing gets blown out of proportion, it could mean a correction bigger than 20% and lot of people will be in a world of hurt.

And it does mean the easy money phase of AI might be over. From here on out, investors will separate the real builders from the buzzwords. The market will stop paying for “AI fairy dust” and start demanding profits.

My Take

Burry’s move and Wall Street’s warnings feel like the same message from different messengers: the air is getting thin up here.

If we’ve made money on the AI wave — congrats. Seriously. But now’s the time to review our portfolio before the correction reviews it for us.

Trim our high-flyers, diversify into sectors with real earnings, and don’t assume yesterday’s winners will keep leading tomorrow. Even the smartest chips can’t out-compute a reality check.

Bottom Line:

If the AI bubble have not burst yet, it’s definitely hissing. And when Michael Burry starts betting against the hype while the top brass on Wall Street warns of a pullback, that’s not noise — that’s a signal.

Check your exposure. Take some profits. Remember: the goal isn’t to be first to the moon; it’s to make it back to Earth in one piece.