Look, we all love a good AI story. Robots doing our homework, cars driving themselves, and computers that can write better poetry than most humans (sorry, not sorry). But here’s the thing about bubbles – they’re really fun until they pop in your face.
Right now, AI stocks are flying higher than Elon’s rockets, and some very smart (and very rich) people are starting to get nervous. Michael Burry – yes, the guy who called the 2008 housing crash and got Christian Bale to play him in a movie – is betting big against the AI boom. When the guy who predicted the last major bubble starts shorting your favorite stocks, maybe it’s time to pay attention.
So which AI darlings are most likely to come crashing back to earth if this whole thing goes sideways? Let’s break it down:
Nvidia (NVDA) – The Golden Child
Nvidia is basically the cool kid everyone wants to sit with at lunch. Their GPUs power pretty much every AI data center on the planet, and their stock has gone up over 1,100% in three years. That’s not a typo – eleven hundred percent. Their market cap briefly hit $5 trillion, which is more than the GDP of most countries.
But here’s where it gets spicy: Burry bought put options on 1 million Nvidia shares. That’s Wall Street speak for “I think this thing is going down, hard.” Early signs suggest AI spending might be cooling off, and when everyone’s buying the same thing for the same reason, well… that’s usually when things get interesting.
Palantir (PLTR) – The Government’s Favorite
Palantir is like that friend who’s really good at organizing data but charges you $200 for helping you clean your garage. Their AI platform has government agencies and big companies throwing money at them like they’re a Vegas slot machine on a hot streak. The stock is up almost 3,000% in three years – yes, you read that right.
But here’s the kicker: they’re trading at 200 times forward earnings. To put that in perspective, that’s like paying $200 for a burger because the restaurant promises it’ll taste really, really good someday. CEO Alex Karp says you’re “crazy” if you bet against them, but when your valuation is that detached from reality, even small disappointments can cause big problems.
Tesla (TSLA) – The Shape-Shifter
Tesla started as a car company but now wants to be an AI company too. Fair enough – pivot or die, right? They’re betting big on self-driving cars and robots, which has helped push their stock up 300% in three years. Not as crazy as the others, but still triple the S&P 500’s returns.
The problem? Full self-driving has been “just around the corner” for about as long as we’ve been waiting for flying cars. Burry called Tesla “ridiculously overvalued,” and when you’re pricing in AI-driven growth while your core EV business is slowing down, that’s a pretty precarious position.
The Bottom Line
Look, maybe this isn’t a bubble. Maybe AI really will change everything and these valuations will look cheap in hindsight. But when stocks are trading at these levels, there’s not much room for error. Sometimes the smartest move is just acknowledging that what goes up really, really fast can come down just as quickly.
Don’t say we didn’t warn you when the music stops.