"The Big Short's" Michael Burry Is Betting Against Palantir and Nvidia and Buying 1 Beaten Down Apparel Stock Instead

Michael Burry of Scion Asset Management rose to widespread fame after being portrayed by Christian Bale in the 2015 film The Big Short. Burry is one of a handful of investors who correctly spotted the housing bubble prior to the 2007-09 Great Recession and made big bets against mortgage bonds using complex financial instruments. His efforts back then turned Burry into an investing legend, which is why investors are always so curious to see what Scion is up to.

In the third quarter, Scion made big bets against artificial intelligence (AI) giants like Palantir Technologies (NASDAQ: PLTR) and Nvidia (NASDAQ: NVDA) and also purchased one beaten-down apparel stock.

Image source: Palantir.

Betting big against popular AI names

In 2025's third quarter, Scion purchased millions of put options against the AI decision-making company Palantir and the AI chip king Nvidia. According to filings, Burry and Scion purchased 5 million put options on Palantir for a notional value of $912 million and 1 million put options on Nvidia for a notional value of $186.5 million.

Burry has been more active on social media lately, posting clues on X regarding his bets against Palantir and Nvidia. One showed that growth in U.S. tech capital expenditures is approaching levels seen during the tech bubble. Other charts posted by Burry also expressed concerns regarding how much money seems to be circulating between the major AI players like Nvidia, OpenAI, Microsoft, and others.

Another post by Burry raises another issue that has emerged among AI critics, relating to how the large hyperscalers have understated depreciation in their accounting by extending the useful life of assets. Burry said that firms like Meta Platforms and Oracle are extending the life of infrastructure that is on a fairly brief product cycle, which will result in each firm overstating earnings by close to 21% and 27%, respectively, by 2028.

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-- Cassandra B.C. (@MichaelJBurry__) Nov. 10, 2025

Burry certainly raises some valid points that investors should take seriously. I think that Nvidia and Palantir are great companies with immense potential. But investors need to look past the hype and acknowledge that every asset has a price. I'm certainly not out here buying Palantir while it trades at 268 times forward earnings.

Buying a luxury apparel brand down 55%

During the quarter, Burry also purchased a few stocks, one being the luxury apparel brand Lululemon (NASDAQ: LULU), which is well known for its high-quality athletic apparel. Scion purchased 100,000 shares of the stock, which, at the end of the third quarter, were valued at about $18 million.

Lulu was a stock that performed well during the pandemic, as consumers with built-up savings, prioritized fitness, and found Lulu's fitness apparel and strong digital presence appealing.

But in a lot of ways, the company has struggled like many higher-priced apparel brands (including Nike), and the stock price has plummeted 54% this year. The consumer has faced intense inflation and is no longer as willing to pay upwards of $70 to $80 for one workout shirt. Meanwhile, consumers also tend to feel that Lulu's brand has become stale and hasn't gravitated to new product lineups as much as they once did. Competition has also been an issue.

Exacerbating issues include President Donald Trump's tariffs, particularly since the expiration of the de minimis exemption on Aug. 29, which allowed international shipments below $800 to enter the U.S. nearly tariff-free and without complex paperwork.

On Lululemon's earnings call for the second quarter of fiscal 2025, which ended on Aug. 3, management said the removal of the de minimis exemption and higher-than-expected tariff rates will result in a $240 million impact on the company's gross margin in fiscal 2025, and $320 million in fiscal 2026. The company's business in the U.S. also struggled in the quarter. Through the first half of 2025, net revenue at the company increased about 7% year over year, while diluted earnings of $5.70 per share were flat.

Now, it's very possible that management can get the U.S. business back on track with the release of its 2026 product line, and international sales have been performing well. The stock also only trades at about 13 times forward earnings. Burry is undoubtedly a seasoned veteran when it comes to finding value, but I'm not entirely convinced the company has turned the corner just yet. Scion has also changed its portfolio pretty significantly in recent quarters and years, so we can't rule out that Burry views the stock as more of a short-term trade, as opposed to long-term value.

Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Lululemon Athletica Inc., Meta Platforms, Microsoft, Nike, Nvidia, Oracle, and Palantir Technologies. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.