To The Moon

🌟🌟🌟Michael Burry is shorting Palantir and Nvidia, 2 Titans of the AI frenzy, making up 80% of his disclosed short positions.  It is a bold contrarian bet, echoing his legendary 2008 call. But this time, the set up is different.

Palantir $Palantir Technologies Inc.(PLTR)$  trades at trailing P/E ratio of over 400x while Nvidia trades at P/E ratio of 57x.  Valuations are rich, sentiment is euphoric but liquidity is tightening.

Yet unlike the housing crisis, AI isn't built on leverage.  AI is built on innovation, infrastructure and real earnings.

Palantir dropped 7% despite beating earnings.    Nvidia dropped almost 4%.  These are signs of valuation fatigue, not collapse.

So is this a trend reversal or just a tactical breather?

The Case for a Short Pause - Bullish View

Strong Fundamentals : Both Nvidia and Palantir have reported robust earnings and raised their full year guidance, demonstrating strong demand for their AI products and services.

Analyst Confidence : Some analysts like Wedbush Securities, view any short term pullback as a buying opportunity, maintaining positive ratings and high price targets for these stocks.  They see these companies as core players in the coming AI decade.

Proven Growth : Nvidia and Palantir shares have surged dramatically this year due to their pivotal roles in the AI ecosystem.  This suggests that the underlying growth story may still be intact despite valuation concerns.

Michael Burry 's Timing Issues :  Burry has not always been correct with his timing.  For example a "Sell" warning in January 2023 was followed by a strong market rebound.  His current positions have reportedly incurred paper losses since the Q3 filing date.

The Case for A Long Trend Reversal - Bearish View

Extreme Valuations : Palantir in particular, has been trading at a very high P/E ratio of over 400x, which many analysts and Burry consider unsustainable.

Historical Parallels:  Burry and other market observers are drawing clear parallels between current AI capital expenditures and the dot-com era  collapse.

Wider Skepticism : The US market's general decline on Tuesday was linked to warnings from other Wall Street executives about overvalued AI stocks,   suggesting a broader market concern beyond just Burry's bet.

Slowing Cloud Growth :  Burry has pointed to a slowdown in cloud growth at major tech companies like Amazon and Microsoft as a leading indicator of potential trouble in the broader tech sector.

Concluding Thoughts 

The current Bearish market movement reflects deep uncertainty.  Michael Burry's Big Short bet has heightened awareness of potential valuation risks and triggered a market correction.  However it is not a definitive signal of a long term trend reversal.

The ongoing debate pits strong company fundamentals against frothy market valuations.  The ultimate direction will depend on whether AI demand can continue to justify the high prices or if a broader economic and valuation reset is due.

My Personal Take 

I will continue to dollar cost average through Tiger Brokers $Tiger Brokers(TIGR)$ Auto Invest feature on quality stocks such as Nvidia and $Alphabet(GOOGL)$ .  This disciplined approach helps to remove the emotion  from the process.

I believe that the recent pullback is a short pause as the market indexes have historically tended upward over the long term. 

As Warren Buffett likes to say "Be fearful when others are greedy and greedy when others are fearful."  This AI pullback?  It is a gift.  Great stocks are on sale.    Nvidia, Palantir and the Magnificent 7 are the infrastructure for the future.

@Tiger_comments  @TigerStars  @TigerClub  @CaptainTiger  @Tiger_SG