Michael Burry’s Palantir short reveals a bet not against AI, but against market faith in geopolitical premium

Michael Burry is betting that investors are confusing Palantir’s role in warfighting with its worth as a stock.

He holds long-dated put options on Palantir expiring in December 2026 and June 2027, with strike prices of $100 and $50. The stock closed Friday at $128.06 — nearly 14% below its intraweek level and 28% below its year-to-date peak. Burry believes the company’s fundamental value is below $50 a share, less than half its current trading price.

That gap is the trade. He’s not shorting because Palantir lacks government contracts. He’s shorting because the market is pricing in permanence, scale, and profitability far beyond what fundamentals support. A recent social media post from Donald Trump — praising Palantir’s warfighting capabilities and telling skeptics to “ask the country’s enemies” — briefly stabilized the stock after a steep intraday drop. The endorsement reinforced the narrative that Palantir is indispensable to national defense.

And it is. The company has deep ties to the US military and intelligence community. Under the current administration, it has continued winning Pentagon contracts and expanding its footprint in national security operations. CEO Alex Karp remains closely engaged with the White House.

But Burry sees the rally as sentiment-driven, not value-driven. He’s held this short since late 2025, rolling it over multiple times. He’s not betting on collapse. He’s betting on convergence — that a stock trading on geopolitical premium will eventually price on earnings, cash flow, and realistic growth margins.

He’s making a parallel move on Nvidia, buying January 2027 put options. There, he cites high implied volatility and prefers the defined-loss structure of options over an outright short. The common thread isn’t AI skepticism. It’s a rejection of duration — the idea that today’s dominance locks in decades of cash flows.

Burry’s trade forces a distinction: strategic importance does not guarantee shareholder return. Palantir may be vital to the Department of Defense. That doesn’t mean it’s a bargain at $128.

Investors are now forced to distinguish between a company’s strategic geopolitical relevance and its equity valuation, as Burry bets the market is conflating the two.