Palantir CEO Alex Karp has launched a blistering attack on short-sellers, singling out Michael Burry, the investor made famous by “The Big Short,” after a regulatory filing revealed Burry’s Scion Asset Management had taken significant short positions against both Palantir and Nvidia.
“The two companies he’s shorting are the ones making all the money, which is super weird,” Karp told CNBC’s “Squawk Box.” “The idea that chips and ontology is what you want to short is bats— crazy.” Karp went on to suggest that Burry was effectively shorting the future of AI, highlighting Palantir’s expertise in data analytics and Nvidia’s dominance in AI-powering hardware.
The disclosure revealed that Scion Asset Management held put options with a notional value of approximately $912 million against Palantir and $187 million against Nvidia as of September 30th. However, the filing did not specify the strike prices or expiration dates of these contracts, leaving the precise nature and potential profitability of Burry’s bet unclear.
The market reaction to the news was immediate, with Palantir shares sliding around 9% on Tuesday despite the company’s strong third-quarter earnings report and upbeat guidance. This decline underscores the growing sensitivity among investors regarding the high valuations of AI-related stocks. Prior to Tuesday’s trading, Palantir’s stock had surged 173% year-to-date, resulting in a forward price-earnings ratio of 228. Nvidia also experienced a downturn, falling more than 2% after a year of gains exceeding 50%.
Karp didn’t hold back his disdain for the short-selling strategy. “I do think this behavior is egregious and I’m going to be dancing around when it’s proven wrong,” he stated, adding, “It’s not even clear he’s shorting us. It’s probably just, ‘How do I get my position out and not look like a fool?'”
Burry’s bearish sentiment on the market has been building. Last week, he posted a cryptic message on X, hinting at renewed caution: “Sometimes, we see bubbles. Sometimes, there is something to do about it. Sometimes, the only winning move is not to play.”
The core of Karp’s argument lies in Palantir’s fundamental strength and its strategic positioning in the AI landscape. The company’s Gotham and Foundry platforms are increasingly vital for both government and commercial clients seeking to harness the power of data analytics, particularly in complex and rapidly evolving environments. While Palantir’s valuation is indeed lofty, it is based on the expectation of sustained, high-growth revenue driven by rising demand for AI solutions, along with a growing track record of profitability.
The clash between Karp and Burry raises fundamental questions about market valuation, the role of short-sellers, and the future of AI investments. Is Burry’s bet a contrarian masterstroke based on a deep understanding of market cycles and potential overvaluation? Or is Karp correct in asserting that short-selling is being used to manipulate the market and undermine fundamentally sound businesses?
The answer is yet to be seen. However, one thing is clear: the debate surrounding Palantir’s valuation and its place in the AI ecosystem is far from over, and the actions of influential investors like Michael Burry will continue to shape the narrative.
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