Why Michael Burry Is Betting Big Against Palantir's $300 Billion Valuation

Michael Burry, the hedge fund manager famous for shorting the housing market before 2008, just published a 10,000-word essay explaining why he’s making bearish bets on Palantir. He disclosed put options (essentially shorting) both Palantir and Nvidia last year, meaning he profits if their stock prices fall. Now he’s putting his detailed thesis on the record.

The core argument? Despite Palantir’s impressive recent stock surge—up about 450% over the past two years—Burry believes the company is fundamentally overpriced and its growth story doesn’t hold up under scrutiny. He thinks the current $300 billion valuation will eventually collapse to under $100 billion.

The CEO, the Money Burn, and a $1.1 Billion Stock Award

Burry doesn’t start with financials. He starts with people. Specifically, he examines Alex Karp, Palantir’s Chief Executive, using quotes from a biography to illustrate his management style. Burry notes that while he hasn’t met Karp personally, the deeper issue isn’t personal—it’s about how the company operates.

Before going public in late 2020, Palantir had accumulated massive losses despite its reputation as a powerful government contractor. When the company filed its S-1 in summer 2020, the damage was visible: cumulative losses of $3.96 billion, with $1.2 billion burned in just 2018-2019 alone.

Then came the kicker. In August 2020, just before Palantir’s direct listing, the board awarded Karp $1.1 billion in stock options. Burry sarcastically summarized this dynamic: “If you have not realized it by now, the company really knows how to throw money around.” Large funding rounds (including a 2019 Series K at $11.38 per share that raised $899 million) and revolving credit lines kept the cash flowing despite operational losses.

The AI Platform Bet: Theoretically Powerful, Practically Risky

Palantir launched its Artificial Intelligence Platform in 2023, positioning it as a revolutionary system that connects large language models from OpenAI and Anthropic to customer data. The market loved the narrative. Last year, the company reported $4.5 billion in annual sales, a 56% increase from 2024.

But Burry questions the premise. He argues that Palantir’s AI relies on third-party language models that are “systematically unreliable” for mission-critical applications. Citing a Stanford University paper on reasoning failures in large language models, he points out that precision and confidence matter in domains like legal reasoning, scientific analysis, medical decision support, and military targeting.

When Burry first disclosed his short position, Karp responded publicly, calling bets against AI companies “super-weird” and “batshit crazy.” Burry’s counterpoint: executives across industries feel pressured to adopt AI, driving artificial demand for Palantir’s software today. But that pressure is temporary.

The Geography Problem: That’s Consulting, Not SaaS

Buried in Palantir’s numbers is a geographic split that raises red flags for Burry. U.S. commercial revenue jumped 137% last year. International commercial revenue? Only 2%.

This massive disparity tells a story Burry finds troubling. High growth concentrated in one geography, dependent on U.S.-based engineers and close on-the-ground relationships, looks a lot more like professional consulting than scalable SaaS software. True SaaS businesses scale internationally and don’t require expensive labor-heavy deployment models.

Burry also notes that Microsoft and Salesforce, far better capitalized and more entrenched, are watching. He warns that “they may pounce before or after savvy customers realize Emperor Palantir has no clothes.” As AI tools become cheaper and more accessible, companies could handle data integration themselves, eliminating Palantir’s value proposition.

The Verdict: Michael Burry’s $100 Billion Prediction

Burry concludes that Palantir’s winning streak won’t endure. His direct forecast: the company will eventually prove worth less than $100 billion, not the current $300 billion price tag. He’s positioned his portfolio to profit from that decline.

The market has yet to agree. Wall Street analysts still rate the stock overweight on average, according to MarketWatch. But for Burry, who has made billions by seeing flaws others miss, patience is a strategy.