Investor Michael Burry, famous for his role in "The Big Short," is putting his warnings about the AI bubble into action. Recent regulatory filings show that his Scion Asset Management has allocated roughly 80% of its portfolio to short positions against two iconic AI-driven companies—Palantir and NVIDIA—a bold bet that has drawn market attention.

Burry recently posted cryptic messages on social media platform X, referencing classic films like "WarGames" and "The Big Short," stating: "Sometimes we see bubbles. Sometimes we can act. Sometimes the only winning move is not to play." He later hinted that AI investments yield insufficient returns, likening the current AI frenzy to the excessive capital expenditures on fiber optics during the dot-com bubble, predicting that many leading AI companies will eventually collapse.

The 13F filing, released two weeks early, confirms Burry is indeed "acting." His put options against Palantir carry a notional value of $912 million (equivalent to 5 million shares), while his NVIDIA puts total $186 million. However, the filing does not disclose the actual premiums paid, strike prices, or expiration dates for these options.

This bet has already faced significant paper losses. Since the September 30 filing date, both stocks have surged, implying Burry’s short positions have suffered substantial unrealized losses unless he has closed them to limit damage. Market observers question whether his aggressive shorting strategy can replicate his 2008 subprime mortgage crisis success.

**Concentrated Shorts on AI Leaders** Scion Asset Management’s portfolio reveals a stark divide. One segment consists of smaller traditional holdings, including Bruker, Lululemon, SLM, and Molina Healthcare. The other is entirely composed of options, with the most notable being puts on Palantir and NVIDIA. These two bets dominate the portfolio, signaling Burry’s concentrated attack on what he views as an "AI bubble." Notably, the filing omits critical details like the actual cost, strike prices, or expiration dates of these options, which will ultimately determine the trade’s outcome.

This strategy mirrors Burry’s pre-2008 playbook, where he famously shorted the U.S. housing market via credit default swaps (CDS). Now, he’s targeting assets emblematic of "market euphoria," aiming to repeat history. By backing his public bubble warnings with action, some market watchers interpret this as a potential peak signal—akin to "swinging for the fences on a bubble."

**Timing Remains Critical** While Burry’s short bets have captured attention, investors should remain cautious. Historical lessons show that even correct directional calls hinge on timing. During the 2008 crisis, Burry established his short positions nearly two years early. Though he ultimately profited massively, the high cost of maintaining CDS positions almost pushed him to the brink. Premature entries can incur heavy carrying costs and pressure.

Moreover, Burry’s recent market timing hasn’t always been precise. For instance, in January 2023, he warned of market risks with a single-word tweet—"Sell"—only for markets to rally strongly afterward. His current short play faces similar challenges: since the September 30 filing, Palantir and NVIDIA’s stock performance has left his positions underwater.