Palantir Shares Under Pressure as Michael Burry Bets Against AI Leader

The artificial intelligence sector pioneer Palantir finds itself confronting a significant challenge. Despite reporting exceptional quarterly performance and record contract acquisitions, a substantial bearish position taken by "Big Short" investor Michael Burry has triggered a wave of investor selling. This development raises critical questions about whether the technology stock's premium valuation is sustainable or if a major correction is imminent.

Palantir's recent business performance presents a stark contrast to its current stock market troubles. The company unveiled powerful third-quarter results, demonstrating robust operational health:
- Revenue expanded by 63% to reach $1.18 billion
- Record contract bookings totaling $2.8 billion, representing a 151% surge
- U.S. commercial business operations booming with 121% growth

This very success, however, contributes to the current predicament. Following an approximate 150% share price appreciation since the start of the year, Palantir now trades at one of the highest price-to-sales multiples within the entire S&P 500 index. Many shareholders capitalized on the strong quarterly report to secure profits, illustrating the classic market phenomenon of "buy the rumor, sell the news."

Should investors sell immediately? Or is it worth buying Palantir?

High-Profile Short Position Amplifies Downturn

Market sentiment deteriorated significantly last Friday when Michael Burry, who gained fame for his successful bets against the U.S. housing market before the financial crisis, confirmed a notable options position against Palantir. The investor holds put options with a notional value of $9.2 million. These instruments grant him the right to sell Palantir shares at just $50 each until 2027, clearly signaling his expectation of substantial price depreciation. This revelation accelerated a downward trend that began on Thursday, driving the stock even lower.

Strategic Expansion Amid Market Skepticism

As Burry positions for a potential collapse, Palantir continues to execute its growth strategy. The company has outlined plans for "significant investments" in the United Kingdom, aiming to secure additional defense contracts in that market. All eyes now turn to the next quarterly report scheduled for February 2026, which will prove decisive. The critical question remains: Can Palantir sustain its extraordinary growth momentum and win over skeptical market participants, or will Burry's contrarian wager ultimately prove prescient?