Of course, we should also be careful not to jump to conclusions, as Burry might simply be using his ‘Cassandra’ reputation for short-term gains, not for altruistically warning folks of impending disaster…
Today has seen Nvidia shares dip as low as $200, with the price currently down 2.2%.
Palantir is feeling harder hit, with shares dipping as low as $185. It has recovered somewhat at the time of writing, but remains 6.7% down.
Reeling under the significant impact of short sellers this morning, Palantir CEO Alex Karp has been on CNBC, dismissing Burry's talk of an AI bubble as "batsh*t crazy" in a clearly panicked tone. See embed below at 2m8s.
Watch On Nvidia: the AI gold rush shovel maker We think Nvidia may be less vulnerable to an AI bubble bursting than many pure AI plays. Remember, it has been in the enviable position of profiting from making shovels during this gold rush. The worst hit, when the day comes, will surely be those AI firms trading mostly on the promise of ‘jam tomorrow.’
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Mark Tyson Social Links Navigation News Editor Mark Tyson is a news editor at Tom's Hardware. He enjoys covering the full breadth of PC tech; from business and semiconductor design to products approaching the edge of reason.
TechieTwo Fortunes are made everyday by those able to influence the movement of stock markets. You'd have to be a fool to think that you can outmanuever the day traders and manipulators. The "players" make money on both the rise and fall. Reply
JamesJones44 Just short the QQQ once the santa rally is done in late December. Worked like a charm for the .com bubble in 1999 (QQQ was brand new back then). There are AI ETFs out there as well, but there not a liquid which could be an issue for those with low risk appetites. Reply
AngelusF The ultimate irony will be if an AI correctly predicts the date of the crash. Reply
joeer77 Scare article. Sorry I don't believe it. The S&P 500, 200 day and 50 day moving averages show strong divergence and thus a strong economy. Same for Nvidia. No one has seen what a 5 trillion dollar company like Nvidia can do to the market. The signs were there in 2008. I don't see them this time. Reply
AngelusF joeer77 said: Scare article. Sorry I don't believe it. The S&P 500, 200 day and 50 day moving averages show strong divergence and thus a strong economy. Same for Nvidia. No one has seen what a 5 trillion dollar company like Nvidia can do to the market. The signs were there in 2008. I don't see them this time. The signs aren't financial, though. AI is very much in "emperor's new clothes" territory now with everyone saying how marvelous it is, but we all know that it's being adopted indiscriminately by companies wanting to save some money regardless of the impact on their customers and staff. Once they realize this is a bad move, like losing customers because of it, they'll drop it like a stone and that's when the crash will start. Either that or AGI will be developed first and then who knows what'll happen? (Just for the record, I'm not at all anti-AI as such, I use it on a daily basis) Reply
DS426 joeer77 said: Scare article. Sorry I don't believe it. The S&P 500, 200 day and 50 day moving averages show strong divergence and thus a strong economy. Same for Nvidia. No one has seen what a 5 trillion dollar company like Nvidia can do to the market. The signs were there in 2008. I don't see them this time. If stock market crashes happened exactly the same every time, they wouldn't happen as we could avoid them. There are some positive signs, but there are also negative signs. The market still has a lot of confidence overall, but when that confidence fades drastically, the ball is likely already too big as it rolls downhill to stop (full recession and not just a market correction phase). Even GDP is largely propped up by AI spending; GDP without AI spending is thought to be barely over 0% according to some estimates. Reply
LordVile joeer77 said: Scare article. Sorry I don't believe it. The S&P 500, 200 day and 50 day moving averages show strong divergence and thus a strong economy. Same for Nvidia. No one has seen what a 5 trillion dollar company like Nvidia can do to the market. The signs were there in 2008. I don't see them this time. The stock is massively overinflated based on current demand. Not being able to sell to china and reports of companies having data centers worth of cards they can’t use doesn’t look like a profitable outcome for Nvidia Reply
American2021 Once the people's champion leaves office, the LISEP economic metric will climb up to between 35% to 40% over the next decade as the tariffs fall away and mass offshoring to foreign nations/mass outsourcing to foreign firms/mass in-sourcing of foreign replacement labor resumes as before; only this time with a rapid expansion of next generation AI/automation/robotics as well. It will be interesting to see if the general population realizes they've been materially dealt out of their own nation's domestic labor market by an argentocracy. As C. S. Lewis wrote, "Experience: that most brutal of teachers. But you learn, my God do you learn." If they do, the bubble is going to pop not simply deflate over time after it reaches its peak as normally happens when invention/innovation inflates a sector. Reply
FallenKell LordVile said: The stock is massively overinflated based on current demand. Not being able to sell to china and reports of companies having data centers worth of cards they can’t use doesn’t look like a profitable outcome for Nvidia Trying to figure out how other companies owning data centers worth of cards that they can't use causes a problem to Nvidia. Nvidia already made the sale, they already achieved their profits from that hardware. It is the company that has them sitting in their data centers that needs to have figured out a way to receive a profit from their investment in purchasing those cards in the first place. Nvidia already put the money in their own pockets and their investor's pockets, and it is on the other companies to figure out how to get a return on their own investment, as Nvidia already made their return… The only downside to Nvidia would be if they have overcommitted future manufacturing and investments other sunk costs in manufacturing lines and product lines that they can't either pivot to other products/markets and still cover their own costs. There may also be some lost future sales due to a possible glut of GPU cards in the secondary markets from companies that bought cards that they can not figure out how to use them and sell to other companies that do not mind taking the risk on second-hand products (not all business will take that risk and will insist on buying new and/or ones that have proper warranty). But that is really it. Nvidia already made it's money off those cards and chips, which is part of the reason the stock is up. Sure the stock may go down some if the market completely pops and Nvidia can no longer project future sales growth the same way it does now, but that is the normal risk to any investor on any stock as the future is not known… Reply
Key considerations
- Investor positioning can change fast
- Volatility remains possible near catalysts
- Macro rates and liquidity can dominate flows
Reference reading
- https://www.tomshardware.com/tech-industry/artificial-intelligence/SPONSORED_LINK_URL
- https://www.tomshardware.com/tech-industry/artificial-intelligence/2008-financial-crisis-prophet-bets-against-the-ai-bubble-with-potential-usd1-billion-payout-michael-burry-reveals-put-options-on-nvidia-and-palantir#main
- https://www.tomshardware.com
- TP-Link TL-WR3602BE Wi-Fi 7 Travel Router Review: Compact and packed with features, but average performance
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- DRAM prices skyrocket 171% year-over-year, outpacing the rate of gold price increases — AI demand drives massive price hikes as shortage takes hold
- NVIDIA and US Technology Leaders Unveil AI Factory Design to Modernize Government and Secure the Nation
- Razer's BlackShark V2 X gaming headset drops to less than £29 — a huge 53% saving makes them the ideal audio upgrade on a budget
Informational only. No financial advice. Do your own research.