Michael Burry, Peter Thiel, more investors bet against AI boom

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Despite 2025’s AI boom and Nvidia’s brief sprint past a $5 trillion market cap, a handful of marquee investors are getting out of the AI market — or betting against it.

Famed Big Short investor Michael Burry has taken more than a billion dollars’ worth of bearish options betting against leading AI stocks Nvidia and Palantir. Peter Thiel has fully cashed out of his Nvidia position. And SoftBank has unloaded its entire $5.8 billion stake in Nvidia to fund its bet on ChatGPT maker OpenAI.

Even the quants are trimming prominent AI positions. Bridgewater, Tiger Global, and other funds have pared back Big Tech positions, while hedge fund flow data shows rising short-selling interest across the AI market.

“The fact that today’s largest tech firms are raising debt at scale to fund AI infrastructure is a clear signal: We’re in the middle of one of the biggest compute-buildouts in history,” said Andrew Sobko, founder at Argentum, a decentralized marketplace for the AI chips known as graphics processing units (GPUs). “But with billions of dollars borrowed, investors have a right to ask: What happens if the demand curve stalls or the expected returns don’t materialize?”

Here's what to know about some of the biggest and most notable bets against the AI boom.

Major investors who are reducing or short-selling AI stocks

• Bridgewater Associates has trimmed large-cap AI and Big Tech positions, signaling caution around elevated valuations in the AI trade.

• Tiger Global Management has reduced exposure to major AI and mega-cap tech names, part of a broader portfolio de-risking in the sector.

• Tiger Cub hedge funds like Coatue, Lone Pine, Viking, and D1 have pared back AI and Big Tech positions, reflecting a shift toward more balanced exposure.

• Michael Burry has taken on more than $1 billion in bearish put options against leading AI stocks Nvidia and Palantir.

• Peter Thiel has fully exited his Nvidia stake, liquidating his remaining shares.

• SoftBank has sold approximately $5.8 billion worth of Nvidia stock, reallocating capital toward other investment themes and new bets.

What's behind the bets against AI

Professional investors say that AI remains in the early infrastructure-building phase, with notable “pick-and-shovel” winners like Nvidia seeing their revenues skyrocket.

“After growing more than 60% in two years in row, hyperscalers’ (companies that operate massive, hyperscale data centers providing vast amounts of on-demand computing power, storage, and networking services) capital expenditures are expected to grow another 30% and top $500 billion in 2026, significantly higher than 10% growth projected in the beginning of 2025,” said Pei-ju Lee, deputy director of research at Bradley, Foster & Sargent, a financial advisory firm.

But markets are becoming increasingly skittish of hyperscalers’ aggressive AI spending. “That’s because big technology firms were able to fund AI investments over the past two years with enormous cash flow generated by their cash cow core businesses, but recently have been turning to borrowing,” Lee said.

For instance, in October alone, Meta and Oracle borrowed $70 billion through bonds and loans. “Even more concerning is the use of the notorious off-balance sheet debt,” Lee added. “Meta and Musk’s xAI added almost $40 billion in debt in the past month. For those who remember Enron’s epic collapse, the rise of off-balance sheet debt could be the canary in the coal mine.”

Market experts also worry about a systemic crisis, as these investments now account for more than 40% of U.S. GDP growth.

“In particular, the majority of the spending hinges on OpenAI’s whopping $1.4 trillion commitment,” Lee noted. “If OpenAI, which is not going to be profitable until 2029 at the earliest, can’t secure funding and fails to make good on the commitment, the market is going to react very negatively. Then, the valuation of the high-flying AI arms dealers, like semiconductors and cloud infrastructure companies, is going to be significantly compressed."

Interest wanes as 'AI slop' gains

AI market angst isn’t because the core players are undervalued; in fact, their fundamentals remain strong, and they continue to drive real innovation and economic value.

“What’s dragging the broader narrative down is the wave of low-quality 'AI slop, companies and products that contribute little substance but create noise, confusion, and inflated expectations,” said Shahrzad Rafati, founder and CEO of RHEI, a Vancouver-based global media and technology company.

Rafati notes the actual AI friction point isn’t the speed of the technology — that is relentless — but the staggering capital inefficiency in the AI market.

“Too much funding is chasing incremental gains in model training, creating 'AI slop' that offers limited differentiation,” she said. “Sophisticated investors are right to be concerned about the divergence between sky-high valuations and the companies that actually demonstrate real tech, solving real problems, for real customers. That fundamental value creation, whether in the largest platforms or in a focused private firm, is the only measure that matters in the long term."

Rafati also noted that sophisticated investors like Burry and Thiel aren't betting against the technology; they are betting against the inflated valuations of the undifferentiated cohort. “They’re reducing exposure to the broad market hype to protect against the AI slop,” she said. “Their actions emphasize that smart money is increasingly focused only on AI entities, whether massive public firms or smaller, focused private companies that have demonstrable real tech, real customers, and real solutions."

Investors should ignore the noise and stick to the basics

Market gurus say history shows that past revolutionary technology trends have always experienced turbulence, and AI is no different. “Just like the dot-com era, while all the internet vision turned out to be true, the over-investment bubble had to pop and the over-valued market had to collapse before the applications took off,” Lee said.

Additionally, like any disruptive cycle, AI will see corrections, especially as investors realize many ventures are little more than thin wrappers around OpenAI APIs. "Capital will become more discerning, flowing toward moonshots with substance rather than copycat plays,” said Jason Hardy, chief technology officer for AI at Hitachi Vantara in Frisco, Texas. “The AI market is unlikely to implode in dot-com fashion because there is too much enterprise momentum, and infrastructure is committed to its success.”

Beyond generative chatbots, robotics and physical AI will be the next leap, bringing visible, practical transformation to the economy and markets. “The bubble talk obscures the reality that AI’s strongest players are building lasting value, and in the end, pragmatism will prevail,” Hardy said.

Yet no matter where the big dogs stand on the AI market these days, money managers advise investors to ignore the noise and speculation and focus on their unique portfolio management needs.

“The debate over whether AI is a 'boom' or a 'bubble' is interesting, but in reality, it’s a distraction to everyday investors focused on long-term wealth,” said Alex Michalka, head of investments at financial services firm Wealthfront. “No one can know the answer for sure, and attempting to adjust your strategy based on a guess is a form of market timing, which historically is not a wise approach.”

Main Street investors are better off focusing on ensuring they have well-diversified portfolios that includes the level of risk they're comfortable with based on their situation and time horizon, Michalka noted.

“If you're worried about overexposure to AI, your best defense is to ensure your portfolio is diversified across industries, asset classes, and geographies,” he noted. “While an investment in the S&P 500, for example, is great for diversification across companies, it’s wise to also look beyond just U.S. stocks, as much of the market weighting for AI is concentrated in the US.”

Additionally, strategies like direct indexing can be valuable because they let investors track the performance of an index while potentially saving on taxes — and also give them the option to exclude specific AI stocks if they’d like.

“Ultimately, your long-term success hinges not on predicting the future of tech," Michalka said, "but on maintaining discipline, diversification, and time in the market."