The man who famously foresaw the 2008 financial collapse is now issuing a stark warning that could reshape the future of technology and geopolitics. Michael Burry, the investor whose story was immortalized in ‘The Big Short,’ is betting against the very engines of the AI revolution—Nvidia and Palantir—arguing that America’s current path is a strategic blunder that may ultimately hand the AI race to China.
Burry’s central thesis is deceptively simple yet profound: the obsession with brute-force, power-hungry AI chips is unsustainable and ignores a critical battleground—energy. As the US struggles with its own energy infrastructure, China’s massive, state-backed power generation capabilities could become its decisive advantage.
Table of Contents
- Michael Burry’s Nvidia Warning and the $1.1B Bet
- The Core of the Argument: Why Power is the New Silicon
- China’s AI Strategy: A Different Playbook
- What This Means for Investors and the Future of AI
- Conclusion: Is Burry Right Again?
- Sources
Michael Burry’s Nvidia Warning and the $1.1B Bet
Michael Burry isn’t just talking; he’s putting his money where his mouth is. His firm, Scion Asset Management, recently disclosed a staggering $1.1 billion in put options against Nvidia and Palantir in Q3 2025 . This isn’t a small speculative play; it’s a massive, directional bet that the current AI stock rally is built on a faulty foundation.
While his position is concentrated more heavily on Palantir (roughly $912 million) than Nvidia (about $187 million) , the core of his public warning targets Nvidia’s chip architecture. This move has sent shockwaves through the market, given Burry’s legendary status for his prescient call on the subprime mortgage crisis . His actions are a clear signal that he believes a significant market correction in the AI sector is not just possible, but probable.
The Core of the Argument: Why Power is the New Silicon
Burry’s Michael Burry Nvidia warning hinges on an often-overlooked physical reality: AI is an energy hog. Modern data centers running advanced AI models, powered by chips like Nvidia’s A100, can consume a constant 400 watts of power per chip . As AI scales, so does its insatiable demand for electricity.
The US is already facing bottlenecks in its power grid, with new data center projects often delayed due to a lack of available power . The strategy of simply stacking more and more powerful (and power-hungry) chips is hitting a wall. Burry argues that the future belongs not to those who can build the most powerful chip, but to those who can achieve the most computational efficiency per watt. America’s current approach, he believes, is a dead end.
The Strategic Shift Needed
The solution, according to Burry’s logic, requires a fundamental pivot in AI development:
- From Brute Force to Efficiency: Moving away from scaling up to scaling smart—designing algorithms and hardware that do more with less energy.
- Rethinking Infrastructure: Building a national energy strategy that can support the AI boom, which is currently lacking.
- Long-Term Vision over Short-Term Gains: Focusing on sustainable, efficient AI that can be deployed at scale, rather than chasing peak performance benchmarks.
China’s AI Strategy: A Different Playbook
While the US wrestles with its energy constraints, China appears to be playing a different, and potentially more effective, game. The country has a significant advantage: an abundance of cheap, centrally-controlled power generation . This allows Chinese tech giants like Huawei and Alibaba to build massive AI data centers without the same grid limitations faced in the West .
Furthermore, Chinese firms are aggressively innovating to close the performance gap with Nvidia while simultaneously focusing on power efficiency. Their strategies, such as advanced chip-stacking using more mature (and less power-intensive) manufacturing processes, aim to rival Nvidia’s GPUs at a lower cost and with reduced energy consumption . As Nvidia CEO Jensen Huang himself has noted, China has a clear advantage in AI infrastructure construction and energy availability .
This combination—cheap power and a focus on efficient, home-grown alternatives—creates a formidable challenge for the US. Burry’s point is that by ignoring this energy asymmetry, America is ceding a crucial strategic advantage.
What This Means for Investors and the Future of AI
Burry’s stark assessment is a crucial wake-up call for both investors and policymakers. For investors, it suggests that the current valuations of AI leaders like Nvidia may not be accounting for this fundamental physical and strategic risk. His $1.1 billion bet is a hedge against this very scenario.
For the future of AI, this debate could mark a turning point. The industry might be forced to accelerate a shift toward more sustainable and efficient computing paradigms. This could benefit companies focusing on energy-efficient AI or alternative computing architectures. The race may no longer be about who has the fastest chip, but who can build the smartest, most sustainable AI ecosystem.
Conclusion: Is Burry Right Again?
Michael Burry’s Michael Burry Nvidia warning is a contrarian and deeply strategic take on the AI race. He’s not just betting against a stock; he’s betting against an entire national strategy that he sees as fundamentally flawed. His argument that power is the new critical resource in the tech arms race is compelling and backed by tangible physical constraints in the US and advantages in China.
While only time will tell if his billion-dollar bet pays off, his analysis forces a necessary and uncomfortable conversation about the true costs and long-term sustainability of the current AI trajectory. In a world obsessed with the next big model, Burry is reminding us to pay attention to the power cord.
Sources
- Plus500. “Burry’s $1.1B Nvidia & Palantir Put Options 2025”.
- Various financial news sources on Burry’s put option breakdown.
- Industry analysis on China’s chip-stacking strategy.
- Reports on China’s AI and energy strategy.
- Technical analysis of Nvidia A100 power consumption.
- Coverage on China’s domestic AI chip development.
- Nvidia CEO Jensen Huang’s comments on China’s infrastructure advantage.
- Historical context on Michael Burry’s 2008 prediction.