Shares in Palantir Technologies experienced a sharp decline, dropping as much as 10 percent on Tuesday following the revelation of a significant bearish position by prominent hedge fund manager Michael Burry. Known for his pivotal role in predicting the 2008 financial crisis, an event depicted in the film The Big Short, Burry disclosed a hefty bet of approximately $912 million against Palantir. This move involved the use of derivatives, which gain value as a company’s share price falls, according to a regulatory filing issued on Monday. Additionally, Burry reported a smaller position against the AI chipmaker Nvidia.
In response to the bearish sentiment, Palantir’s Chief Executive Alex Karp argued that this move represented a misguided wager against the broader artificial intelligence sector. Karp emphasized, during an appearance on CNBC, that he found such speculation “batshit crazy,” stating, “I do believe this behaviour is egregious and I’m going to be dancing around when it’s proven wrong.” He expressed uncertainty about whether Burry’s action was specifically aimed at Palantir, but underscored his conviction in the company’s trajectory.
While Burry’s hedge fund, Scion Asset Management, had to disclose certain trades in its regulatory filings, it is important to note that fund managers are not required to disclose every type of position, leaving some ambiguity regarding whether his short position against Palantir was isolated or part of a broader strategy. Burry has not publicly commented on the matter.
Notably, Palantir had recently increased its revenue guidance for 2025 to approximately $4.4 billion, surpassing earlier estimates. Additionally, the company reported a remarkable 63 percent rise in third-quarter revenue compared to the same period last year, reaching $1.18 billion, while net income surged to $476 million—above analysts’ expectations. Deutsche Bank analysts characterized Palantir’s results as among the most impressive seen within the software industry, although they acknowledged that the company’s valuation remains challenging to comprehend.
Despite recent fluctuations, Palantir’s stock has appreciated significantly this year, boasting an increase of over 170 percent by Monday’s close, following a staggering 340 percent rise in the previous year. The company’s market capitalization now approaches $500 billion, trading at nearly 230 times forward earnings. Karp defended the company’s valuation amidst skepticism, asserting that critics are struggling to properly understand Palantir’s contributions to geopolitics and its financial valuation.
In recent months, Palantir has secured several prominent contracts, including a long-term $10 billion agreement with the U.S. government. The company’s U.S. commercial revenue witnessed a 121 percent increase to $397 million in the third quarter, coupled with a 52 percent rise in U.S. government sales to $486 million.
Shyam Sankar, Chief Technology Officer, articulated to investors that the company anticipates benefiting from global conflicts and U.S. military modernization efforts focusing on artificial intelligence and data analytics. He highlighted the plethora of opportunities, referencing the U.S.’s involvement in multiple international conflicts and tensions, particularly in Europe, the Middle East, and Africa.
Burry’s bearish position has gained traction within a broader market rally concerning AI firms, positively impacting major U.S. tech players such as Nvidia and Alphabet. According to SEC filings, Scion Asset Management acquired put options equivalent to 5 million shares of Palantir during the quarter ending September 30, reflecting Burry’s substantial investment against the company’s stock.
Palantir, established in 2003 by Karp, Peter Thiel, and others, specializes in providing AI-driven software solutions to various sectors, including government and military applications. Its technology aids in data analysis for various purposes, from supply chain management to national security and immigration enforcement.
The company has garnered a loyal following among retail investors, bolstered by Karp’s strong persona advocating for a robust U.S. global stance. Recent agreements, including a significant partnership with Poland to enhance military capabilities and a commitment to invest up to £1.5 billion in the UK—creating 350 new jobs—highlight Palantir’s continued global expansion.
