Nvidia and Palantir Stocks Fall Amid AI Bubble Fears

5 hours ago7 min read2 comments

The tremors rippling through the artificial intelligence sector became starkly visible this morning as shares in two of its most prominent architects, Nvidia Corporation and Palantir Technologies, experienced notable declines. Nvidia, the undisputed kingpin of the AI hardware ecosystem with its powerful H100 and Blackwell GPUs, saw its stock dip more than 2.2%, while Palantir, whose Foundry and AIP platforms are deployed by governments and Fortune 500 companies to operationalize AI, tumbled over 6%. This synchronous downturn is more than a routine market correction; it is a direct response to a growing, gnawing anxiety among investors that the multi-trillion-dollar AI boom, which has propelled valuations to stratospheric heights, is exhibiting the classic, frothy characteristics of a speculative bubble, drawing unsettling parallels to the dotcom mania of the late 1990s.The catalyst for this latest bout of nerves was a regulatory filing from Scion Asset Management, the firm helmed by the legendary investor Michael Burry, who achieved immortality in financial lore for his prescient bet against the subprime mortgage market, a story immortalized in the film *The Big Short*. The filing revealed that Burry has taken a significant bearish position against both companies, acquiring put options that would profit from a decline in their stock prices.This move was telegraphed in a characteristically cryptic Halloween post on X, where Burry mused, 'Sometimes, we see bubbles. Sometimes, there is something to do about it.Sometimes, the only winning move is not to play,' accompanied by an image of Christian Bale’s portrayal of him. The intellectual weight of Burry’s skepticism cannot be dismissed as mere contrarianism; it forces a critical examination of the underlying fundamentals.While Nvidia’s data center revenue continues to shatter records, the core question is whether this demand is sustainable or if it represents a massive, front-loaded capital expenditure cycle that will eventually plateau. Similarly, Palantir’s astonishing 63% revenue growth in its recent Q3 report, which has driven its stock up over 150% year-to-date, is phenomenal, but it also raises the valuation bar to a level where any minor deceleration could trigger a severe repricing.The backlash was swift and pointed. Palantir’s CEO, Alex Karp, in a combative interview with CNBC, dismissed Burry’s thesis as 'batshit crazy,' arguing that betting against the companies 'making all the money' is a fundamentally flawed strategy.Karp’s defiance underscores the deep philosophical rift in the market: is this a transformative technological revolution justifying premium valuations, or are we witnessing a cycle of irrational exuberance? The data suggests the fear is widespread. A recent Bank of America Global Research survey found that 54% of fund managers now believe AI stocks are in a bubble.The historical precedent is sobering. The dotcom bubble was not built on a lie; the internet was indeed revolutionary.The error was in the timing and the extreme overvaluation of companies with unproven business models, leading to a catastrophic collapse that wiped out even promising ventures. The parallel today is that the potential of AGI and large language models is very real, but the market may have priced in decades of progress into a few short years.For every Nvidia, which has a near-monopoly on the computational engine of this revolution, there are dozens of secondary and tertiary companies whose valuations are entirely predicated on the AI narrative. A correction, if it comes, would likely be tiered, with the strongest players like Nvidia weathering the storm while more speculative ventures face extinction.The current pullback, while minor in the context of Nvidia’s 50% and Palantir’s 350% gains over the past year, serves as a crucial stress test. It is a moment of market introspection, forcing a dialogue between the unbridled optimism of pioneers like Karp and the calculated caution of skeptics like Burry. The outcome will determine whether the AI gold rush matures into a lasting economic paradigm or becomes a cautionary tale of a bubble that, like all others, eventually burst.

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