Global Tech Sell-Off Accelerates as Michael Burry Bets Against AI Giants

This analysis is based on the YouTube report [1] published on November 5, 2025, which highlighted accelerating tech sell-off concerns around AI valuations and Michael Burry’s significant short positions.

The technology sector experienced significant pressure on November 5, 2025, with AI stocks bearing the brunt of selling pressure. Nvidia (NVDA) closed at $198.69, declining $8.19 (-3.96%) on November 4, while Palantir (PLTR) suffered even more severe losses, closing at $190.74, down $16.44 (-7.94%) [0]. Both stocks traded on substantially elevated volumes, with PLTR’s volume of 119.81M shares nearly double its average of 62.16M [0], indicating heightened investor concern and potential capitulation.

The sell-off was catalyzed by Michael Burry’s disclosure of approximately $1.1 billion in short positions against both companies through put options [2][3]. Burry, renowned for his successful bet against the US housing market before the 2008 crisis, has been cryptic on social media, posting on November 3, 2025, “These aren’t the charts you are looking for. You can go about your business” with images suggesting AI valuation concerns [3].

Palantir CEO Alex Karp responded forcefully to Burry’s position during a CNBC interview on November 4, 2025, calling the short bets “bats–t crazy” [1][4]. Karp argued, “The two companies he’s shorting are the ones making all the money, which is super weird” and emphasized that betting against “chips and ontology” was fundamentally misguided [1].

The valuation concerns appear well-founded based on current metrics. Nvidia trades at a P/E ratio of 56.45, while Palantir has an extremely elevated P/E ratio of 433.50 [0]. These multiples suggest significant downside risk if AI growth expectations are not met, particularly given both stocks’ substantial rallies over the past year.

The tech sell-off coincided with China’s announcement to remove tariffs on certain US farm products, suggesting potential market rotation rather than broad risk aversion. Defensive sectors actually showed positive performance, with Consumer Defensive (+0.64%) and Basic Materials (+0.32%) gaining ground [0].

Burry’s involvement adds significant credibility to valuation concerns, potentially triggering broader institutional selling. His track record and the substantial size of his position ($1.1 billion) suggest deep conviction that could influence other value-oriented managers.

Both stocks are approaching critical support levels, with NVDA’s recent low at $197.93 and PLTR at $185.56 [0]. The elevated trading volumes indicate potential liquidity stress if selling accelerates.

Users should be aware that the concentrated sell-off in AI stocks may signal a broader market rotation away from high-growth, high-valuation technology stocks. The involvement of a respected value investor like Michael Burry adds credibility to valuation concerns that could trigger further institutional selling [2][3].

The extremely high P/E ratios, particularly Palantir’s 433.50, suggest these stocks may be vulnerable to even modest disappointments [0].

If AI growth expectations are not met, the high-multiple stocks could face significant downside. The elevated trading volumes suggest potential liquidity issues if selling accelerates, and heavy concentration in AI stocks across portfolios could amplify losses.

Key factors to watch include detailed regulatory filings revealing additional institutional positioning, upcoming earnings reports from AI companies, and whether capital is rotating from AI to other sectors or simply leaving the market entirely.

The current market environment reflects a significant valuation correction in AI stocks, driven by both fundamental concerns and high-profile institutional positioning. While the underlying secular growth trends in AI remain intact, the extremely elevated valuations suggest near-term volatility is likely. The market’s reaction to Burry’s position indicates growing skepticism about AI stock sustainability, particularly for companies with P/E ratios exceeding 400 [0].

The China trade developments provide some broader market support, but the tech-specific concerns appear to be driving the current sell-off dynamics. Investors should monitor key technical levels, institutional flow data, and upcoming earnings catalysts for additional clarity on the sustainability of current valuation levels.