AI Stocks Under Pressure as Shutdown Optimism Fades, Burry Allegations Loom

This analysis is based on the Proactive Investors report [1] published on November 11, 2025, which detailed mixed US stock futures performance with technology stocks under pressure as government shutdown optimism quickly dissipated. The market environment reflects significant sector rotation, with AI stocks facing multiple headwinds including high-profile criticism of accounting practices, major stake sales, and deteriorating sentiment.

The market displayed pronounced divergence on November 11, 2025, with clear sector rotation patterns emerging:

• Dow Jones Industrial Average
  : Reached fresh all-time highs at 47,928 (+559 points, +1.2%), benefiting from shutdown resolution optimism [0][1]
• S&P 500
  : Modest gain of 14 points (+0.2%) to close at 6,847 [0][1]
• Nasdaq Composite
  : Underperformed significantly, declining 59 points (-0.3%) to 23,468 [0][1]
• Russell 2000
  : Small-cap index edged up 3 points (+0.1%) to 2,458 [1]

The technology sector experienced substantial pressure with key declines:

• Technology Sector
  : Down 1.35% [0]
• Communication Services
  : Down 0.01% [0]
• Consumer Cyclical
  : Down 1.41% [0]

Major AI stocks faced significant corrections:

• Palantir (PLTR)
  : $182.30 (-8.66, -4.53%) [0]
• Meta Platforms (META)
  : $609.74 (-17.34, -2.77%) [0]
• Oracle (ORCL)
  : $226.98 (-9.17, -3.88%) [0]
• NVIDIA (NVDA)
  : $192.16 (-0.99, -0.52%) [0]

Michael Burry, renowned for predicting the 2008 financial crisis, launched a comprehensive critique of AI hyperscalers’ accounting practices [2][3][4][5]:

• Depreciation Manipulation
  : Accusing Meta, Google, Oracle, Microsoft, and Amazon of extending useful lives of expensive tech assets to understate depreciation expenses [3]
• Earnings Inflation Impact
  : Estimating $176 billion in understated depreciation from 2026-2028, with specific allegations of Oracle’s earnings being overstated by 26.9% and Meta’s by 20.8% [2][3][5]
• Short Position Confirmation
  : Burry confirmed maintaining short positions against Nvidia and Palantir [3]

The current environment reflects significant capital flow changes:

• Sector Rotation
  : Money flowing from high-growth tech to value-oriented Dow components
• Valuation Concerns
  : Growing skepticism about AI stock valuations amid accounting scrutiny
• Concentration Risk
  : Heavy investor exposure to mega-cap AI stocks creating vulnerability to sector-wide corrections

The 41-day government shutdown resolution created complex market dynamics:

• Data Backlog
  : Massive accumulation of economic data (jobs, inflation, growth) awaiting release [1]
• Fed Policy Uncertainty
  : Delayed data could significantly influence December rate-cut decisions, currently priced at 63.5% probability [1]
• Historical Precedent
  : Based on 2013 shutdown patterns, September jobs report could be released within 5 days of reopening [1]

1. Accounting Controversy
   : Burry’s allegations of systematic earnings inflation across major AI companies could trigger regulatory investigations and significant stock price corrections if substantiated [2][3][4][5]

2. Valuation Pressure
   : The technology sector’s underperformance suggests growing skepticism about AI stock valuations, particularly given the sector’s 1.35% decline against broader market gains [0]

3. Concentration Vulnerability
   : Heavy investor exposure to mega-cap AI stocks creates systemic risk in the event of sector-wide corrections

1. November 25th Deadline
   : Burry’s promised detailed analysis could catalyze significant market movement depending on evidence presented [2][3][5]

2. Company Responses
   : Official responses from Meta, Oracle, and other accused companies to Burry’s specific allegations

3. Economic Data Quality
   : Assessment of delayed economic reports’ reliability and their impact on Federal Reserve policy

4. Regulatory Action
   : Any SEC investigations into alleged accounting practices

5. Technical Support Levels
   : Key support levels for major AI stocks, particularly if selling pressure accelerates

Despite risks, potential opportunities exist:

• Value Rotation
  : Continued shift toward Dow components and value stocks
• Data-Driven Trading
  : Volatility around delayed economic data releases could create short-term opportunities
• Selective AI Exposure
  : Potential for differentiation between AI companies with transparent accounting practices versus those facing scrutiny

The market environment on November 11, 2025, reflects a complex interplay of factors with significant implications for AI sector investors. The combination of government shutdown resolution optimism, high-profile accounting criticisms, and sector rotation creates a challenging environment for AI stocks. The technology sector’s underperformance (down 1.35%) against broader market gains suggests growing concerns about valuation sustainability and corporate governance practices.

Michael Burry’s allegations represent a significant development that could trigger broader regulatory scrutiny and investor reassessment of AI sector valuations. His promised detailed analysis on November 25th could serve as a catalyst for further market movement. The divergence between Dow strength and Nasdaq weakness highlights ongoing sector rotation, with investors potentially reallocating from high-growth technology to more value-oriented investments.

The delayed economic data releases add another layer of uncertainty, potentially influencing Federal Reserve policy decisions and market sentiment in the coming weeks. Investors should maintain vigilance regarding company responses to accounting allegations, regulatory developments, and technical support levels for major AI stocks.