Hedge fund manager Michael Burry has significant positions in put options on Palantir and Nvidia, totaling 80% of his $1.4 billion portfolio. The S&P 500’s high CAPE ratio in October historically indicates a 30% decline in the next three years. Burry’s previous bet against subprime mortgage-backed securities during the 2008 financial crisis earned him $800 million.

Burry’s current short positions on Palantir and Nvidia signal a negative outlook on the artificial intelligence (AI) boom. The AI sector saw exponential growth, with Palantir and Nvidia stocks surging 2,000% and 1,300%, respectively. Retail investors have embraced Palantir, praising CEO Alex Karp for his Wall Street criticisms.

Palantir’s Artificial Intelligence Platform (AIP) and Nvidia’s GPUs have solidified their positions in the AI industry. The S&P 500’s CAPE ratio above 39 in October parallels the dot-com bubble, historically leading to a 30% market decline in the following three years. Investors are advised to exercise caution in the current market environment.

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Read more at Nasdaq: Billionaire Michael Burry Sends Investors a $1 Billion Warning About the AI Boom. History Says the Stock Market Will Do This Next.