Why Burry Is Still Shorting Palantir Despite Trump’s Praise
Conviction is a rare thing in the investing world, and Michael Burry seems to have plenty of it. Even after President Trump publicly praised Palantir, Burry is not budging. He still believes the company is massively overvalued at nearly $500 billion. That valuation puts it above Mastercard and Netflix combined.
Burry thinks clients will eventually realize they are overpaying for something they could build themselves. His position includes put options on five million shares worth roughly $912 million. Trump’s kind words are not changing his math. Sometimes even a presidential thumbs-up cannot move a stubborn short seller.
Burry has also been sounding broader alarms, returning to X after a two-year absence and updating his profile to “Cassandra Unchained”, signaling he sees himself as a prophet warning of dangers few want to hear. He has previously called Palantir’s AI “systematically unreliable”, suggesting the company’s $300 billion valuation at the time was set to fall by more than two thirds. Burry’s stance reflects concerns that widely known strategies and narratives can lose effectiveness as more market participants pile in.
The Specific Bets Burry Is Making Against Palantir
Burry placed a $912 million bet against Palantir using something called put options. Think of puts like an insurance policy that pays out if a stock falls. Here is what makes this bet interesting:
Burry placed a $912 million bet against Palantir using put options, essentially an insurance policy that pays out if a stock falls.
- Burry bought 50,000 put contracts covering 5 million Palantir shares
- The exact strike price remains unknown
- He paired this with $187 million in Nvidia puts
- Together both bets total $1.1 billion against AI stocks
When news broke on November 4 Palantir dropped nearly 8%. Burry clearly believes AI stock prices have climbed dangerously high. Palantir is currently trading at 384 times forward earnings, a valuation that suggests the market has priced in years of flawless execution. Palantir stock has risen 400% over the past year, making it one of the most dramatic climbers in the AI sector. Traders placing these kinds of orders often use limit orders to control execution price and manage risk.
Palantir’s AI Valuation at 100x Earnings Has No Justification
Putting down over $900 million against a stock is a bold move and Burry’s target tells a clear story about where he thinks Palantir’s price has gone wrong.
Palantir trades at 193x earnings and 83x its 2026 sales. Think of paying $83 for a lemonade stand expected to earn $1 next year. Analysts project revenue growth slowing to 41% in 2026. That deceleration means the sky-high multiple becomes harder to defend. Even with strong profits up 250% in 2025, paying 100x or more for future earnings assumes everything goes perfectly. Markets rarely reward that kind of optimism forever.
Net dollar retention sitting at approximately 134% suggests existing customers are expanding their spend, but even that tailwind may not be enough to sustain triple-digit multiples if the rate begins to compress as customer cohorts mature.
A DCF analysis places Palantir’s intrinsic value near $95 per share, implying the stock is overvalued by more than half at its current price of $131.41, a gap that becomes increasingly difficult to ignore as growth expectations moderate.
An index like the S&P 500 can provide perspective on valuation norms across large-cap U.S. companies.
Why Palantir’s Government Revenue Dependence Makes It Vulnerable
Beyond the valuation concerns, Palantir’s heavy reliance on government contracts creates a different kind of risk. Over half its revenue comes from government clients. That makes it vulnerable in ways most investors overlook:
- Contract renewals can get tougher and more competitive each cycle
- Microsoft and OpenAI are pushing hard into government AI tools
- Political shifts can freeze or cancel big spending programs overnight
- Reputational risks from surveillance controversies could cost future contracts
Imagine building your lemonade stand beside one very large customer. If they leave, the whole stand wobbles. The recently secured U.S. Army framework, valued at $10 billion over 10 years, illustrates just how unevenly revenue from such mega-contracts can be recognized across reporting periods. Central banks’ interest rate moves and fiscal policy shifts can indirectly affect government spending priorities and thus defense contracting budgets.
Is the AI Bubble About to Prove Burry Right?
The government contract risk is real, but there is a bigger question looming over Palantir: is the entire AI market a bubble, and is it starting to pop?
Palantir’s stock surged 26-fold since 2023. That is remarkable growth, like a kid growing from 4 feet to over 100 feet tall. But the stock now trades at 90 times projected 2026 revenue. Semiconductor demand and cloud costs are driving much of the capital intensity behind AI deployments.
Burry noticed this. His put options target a drop toward $50, suggesting roughly 60% downside. He spotted the housing bubble early. Now he thinks AI euphoria mirrors that same dangerous pattern of price disconnecting from reality. Anthropic has reportedly reached an ARR of $30 billion, dwarfing Palantir’s historical growth pace and signaling that the competitive landscape beneath Palantir may be shifting faster than its valuation reflects. Adding to the concern, AI companies may be artificially inflating short-term profits by extending depreciation to five or six years, masking the true rate at which expensive chips and servers are becoming obsolete.
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