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 pop in your face.
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 be in for a reality check? Let me break down the three biggest targets:
Nvidia: The Golden Child with a Target on Its Back
Nvidia has been the poster child of this AI boom, and honestly, for good reason. Their chips power pretty much every AI data center on the planet. The stock has gone up over 1,100% in three years – which is absolutely bonkers when you think about it.
But here’s where it gets interesting: Burry bought put options on a million shares. That’s basically him saying “I think this party’s about to end.” And when you look at the numbers, you can see why he might be worried. The company’s valuation assumes everything goes perfectly forever, which… let’s be real, rarely happens in tech.
Palantir: The Data Whisperer Trading at Unicorn Prices
Palantir is like that friend who’s really good at organizing data but somehow convinced everyone they’re the next Steve Jobs. Don’t get me wrong – their AI platform is legit, and they’ve got some serious government contracts. But trading at 200 times forward earnings? That’s not confidence, that’s wishful thinking.
The stock is up almost 3,000% in three years, which sounds amazing until you realize that kind of growth usually means you’re either the next Amazon or you’re about to become the next Pets.com. CEO Alex Karp says you’re “crazy” if you bet against them, but sometimes crazy is just another word for realistic.
Tesla: The EV Company That Became an AI Stock
Tesla is fascinating because it started as a car company but somehow morphed into an AI play through self-driving promises and robot dreams. Elon’s been talking about full self-driving “next year” for about five years now, but the market keeps believing.
The stock’s up 300% in three years, which is still impressive but modest compared to the other two. Still, Burry called it “ridiculously overvalued,” and when you’re pricing in robot butlers and perfect autonomous driving, there’s a lot of room for disappointment.
The Bottom Line
Look, maybe this isn’t a bubble. Maybe AI really is different this time, and these companies will justify their sky-high valuations. But if you’re holding these stocks, it might be worth remembering that gravity works on stock prices too. Sometimes the smartest move is taking some profits off the table before everyone else figures out the music stopped.