“US companies closely tied to the artificial intelligence boom have lost close to $1tn in market value since last Friday.”
AI Overview- Major U.S. technology companies involved in the artificial intelligence boom did experience a significant sell-off during that week, resulting in a collective market value loss approaching $1 trillion.
- Broader reports indicated a loss of more than $820 billion across AI stocks for the week, driven by valuation concerns and profit-taking.
Tech stocks suffer worst week since April after $800bn AI sell-off
Nasdaq falls 3% over the five-day period as investors worry about sky-high valuations
Tech stocks suffer worst week since April after $800bn AI sell-off on x (opens in a new window)
Next big bet
Bigger picture: 13Fs don't tell the whole story about what private funds are up to, and could reflect a position that Burry took weeks ago, but was (or will soon be) closed following the bearish bombshell.
- He executed a similar high-turnover move in the summer of 2023, when he made a $1.6B put bet against the S&P 500 (SP500) and Nasdaq, only to close the entire position in the following quarter. The latest 13F was also strangely filed more than a week ahead of the typical deadline, and was published immediately following Palantir's earnings (causing the stock to tank despite record results and triggering fierce response from CEO Alex Karp). It's also important to note that the "billion-dollar headlines" are notional values, meaning Burry would've only had to put up a fraction of that number to secure the options, albeit one that's a high-stakes wager for his Scion Asset Management.
Recall that Burry has attempted to call many doom-and-gloom scenarios in recent years, including "the greatest speculative bubble of all time in all things" and "the mother of all crashes." His big bets against Tesla (TSLA), another high-flyer in 2021, didn't pan out well, or selling out on his significant position in GameStop (GME) only months before the "Wall Street Bets" rally took the stock to new heights. However, Burry has had success in other calls, like his bullish position this year on Estée Lauder (EL), as well as his contrarian calls last year on Alibaba (BABA) and JD.com (JD).
Time will tell: Corrections are part of any market cycle and that could very well happen given the current concentration in a handful of tech stocks. However, timing the market is always a risky endeavor, and it may be better to stay fully invested barring the belief of a serious downturn. While warnings of an AI bubble have been touted for years, given price-to-earnings ratios and massive amounts of capital spending, there are also significant differences compared to the dot-com era. The leading AI players today are highly profitable with strong cash flows, and have a market that is ready and eager to rapidly adopt revenue-generating tools and efficient models. (3 comments)
Opinion: After Tuesday's elections, Trump’s opponents sense a potential dawn.
Now one thing is for sure, the opening act of the US president’s second term is over,
writes Edward Luce. on.ft.com/43YMn
- He suggests that the results—marked by a sweeping wave of Democratic victories across traditionally red, blue, and swing states—represent a “potential dawn” for those opposing President Trump’s agenda.
- Luce contends that the “opening act” of Trump’s second term has concluded, and what lies ahead may be even more consequential.
- Instead, Luce cautions that a politically embattled Trump may be more inclined to “rip up the rule book”—a reference to his replacement of top officials with loyalists and his aggressive use of executive power.
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