A recent rally in Big Tech stocks faced challenges as Palantir Technologies drew criticism from a notable short-seller, sparking a major sell-off in the market. A filing made public by the Securities and Exchange Commission revealed that Michael Burry’s investment firm held puts on both Nvidia and Palantir, signaling a bet against their future stock performance. This prompted a backlash from Palantir’s CEO, Alex Karp, who expressed his disapproval during a CNBC interview, referring to Burry as “bats— crazy” for attempting to undermine the progress of artificial intelligence.
By the end of trading on Tuesday, Palantir’s shares plummeted nearly 8%, while Nvidia saw a decline of about 4%. This sell-off had repercussions across the broader market, with the S&P 500 index falling by 1.2% and the Nasdaq composite index dropping by 2%. Other tech stocks, such as Oracle and AMD, also experienced losses of around 3.7%.
Karp passionately defended Palantir, arguing that the company significantly contributes to societal benefits and the military through its AI technologies. He criticized short-sellers for questioning the potential of the AI revolution, stating that they had chosen to target a company dedicated to helping others.
Michael Burry, known for predicting the 2008 housing market collapse, has maintained a controversial reputation in the investment community. Despite his skepticism towards specific stocks, Palantir has recently reported impressive financial results. For the quarter ending September 30, the company announced a record revenue of $1.18 billion, marking a substantial 63% increase year-over-year, with a 33% profit margin. Karp attributed this growth to a surge in AI adoption across various sectors in the United States.
Burry’s investment instincts often attract attention, and his critiques are discussed widely in online forums. However, some analysts, including Dan Ives from WedBush Securities, believe that the fundamentals for companies like Palantir and Nvidia remain strong, dismissing Burry’s caution as unnecessary panic. Ives predicts that the current AI investment boom could last another two to three years, reassuring investors that short-sellers may be misjudging the market’s trajectory.
Ultimately, the Big Tech sector continues to draw significant interest from both analysts and investors, who are keen to see how it will adapt and grow in the face of challenges posed by market volatility and speculative short-selling attempts. As the tech landscape evolves, the potential remains for innovation and growth, even amidst skepticism.