Look, we all love a good AI story. Who doesn’t want to believe we’re living in the future where robots do our taxes and cars drive themselves? But here’s the thing about bubbles – they’re really fun until they’re not.
Right now, AI stocks are flying higher than a SpaceX rocket, and some very smart (and very rich) people are starting to get nervous. Michael Burry – yeah, the guy who called the 2008 housing crash – is literally betting against some of these companies. When the dude who predicted the last big bubble starts shorting your favorite stocks, maybe it’s time to pay attention.
So which AI darlings might take the biggest tumble if this whole thing goes sideways? Let me break down the three most likely candidates for a reality check.
Nvidia: The Golden Child with a Target on Its Back
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.
But here’s where it gets interesting: Burry bought put options on a million shares of Nvidia stock. That’s Wall Street speak for “I think this thing is going down.” When you’re trading at a $5 trillion market cap and everyone’s already bought in, where exactly do you go from there?
Palantir: The Overachiever with Scary Math
If Nvidia is the cool kid, Palantir is the straight-A student who somehow became popular. Their AI platform has government contracts coming out of its ears, and the stock is up almost 3,000% in three years. Yes, you read that right – three thousand percent.
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 sandwich because you think it might taste really, really good someday. Even their CEO Alex Karp thinks you’re “crazy” if you bet against them, which is either supreme confidence or a red flag the size of Texas.
Tesla: The Wild Card That’s Not Just About Cars
Tesla might seem like the odd one out here – it’s a car company, right? Wrong. Elon has positioned Tesla as an AI company through self-driving tech and robotics. The stock is “only” up 300% in three years, which in this crowd makes it the underperformer.
The problem? Full self-driving has been “next year” for about five years now, and the competition in AI mobility is heating up faster than a Tesla battery in Arizona.
The Bottom Line
Look, maybe this isn’t a bubble. Maybe AI really is different, and these companies will justify their sky-high valuations. But when stocks are priced for perfection and betting against them becomes a contrarian play, smart money starts hedging their bets.
I’m not saying sell everything and hide under your mattress. But if you’re heavily invested in these AI darlings, maybe it’s time to think about taking some profits off the table. Because in the stock market, what goes up really, really fast can come down even faster.