Michael Burry has closed his bullish Microsoft position and unwound his bearish Oracle trade, yet one high-profile artificial-intelligence wager remains active: a short position in Palantir Technologies. The move looks increasingly contrarian after Palantir shares surged nearly 30% on Tuesday following another blockbuster earnings report.
The divergence suggests Burry’s remaining bet is less about whether AI demand exists and more about whether extraordinary growth can justify Palantir’s valuation. His decision to exit other positions while maintaining the Palantir short underscores a disciplined approach to risk-reward, even as the company delivers numbers that challenge bearish narratives.
Palantir’s quarter defies skeptics
Palantir’s second-quarter revenue jumped 93% year-over-year to $1.94 billion, comfortably beating the $1.80 billion consensus estimate. Adjusted earnings came in at 41 cents per share, ahead of the expected 35 cents. US commercial revenue surged 149% to $764 million, while US government sales climbed 90% to $809 million.
Management raised full-year revenue guidance to a range of $8.150 billion to $8.158 billion and projected third-quarter sales above analyst expectations. These figures directly counter several bearish arguments about the company’s growth trajectory.
Morgan Stanley analysts described Palantir’s streak of accelerating quarterly revenue growth as a “remarkable achievement,” noting that demand remains “extraordinary.” William Blair echoed that sentiment, saying the company’s “stellar performance defies concerns” that OpenAI and Anthropic could erode its competitive edge—a worry Burry has previously highlighted.
Valuation remains the crux
Despite the operational strength, the stock’s valuation leaves little margin for error. Jefferies analysts acknowledged Palantir’s execution but warned that its multiple “leaves little room for a normalization in growth or execution slippage.” Brent Thill, a long-time bear, still views the risk-reward as unfavorable, arguing that the shares require unusually durable growth to justify their revenue multiple.
That perspective offers the clearest explanation for why Burry can remain short after an excellent quarter. His thesis does not require Palantir’s sales to collapse imminently; it requires growth, margins, or investor enthusiasm to eventually cool enough to compress the valuation multiple. A company can keep beating estimates while its stock becomes vulnerable if expectations rise faster than earnings.
Burry’s February analysis went further, questioning Palantir’s receivables, unit economics, and long-term competitive positioning. While the latest results challenge parts of that thesis, they do not answer the fundamental question of what investors should pay for the business.
Burry’s track record of adjusting
Burry’s other trades make his Palantir stance more significant because he has shown a willingness to change course when the risk-reward shifts. His Microsoft position was bullish, involving long-dated call options that he closed in his latest update. His Oracle trade was bearish, driven by concerns over AI infrastructure spending, rising debt, and capital requirements—he reduced that position as shares weakened before closing it entirely.
MarketWatch reported that Burry still maintains bearish exposure to Palantir even after removing other positions and rolling some semiconductor bets further out. His persistence on Palantir, despite the company’s strong performance, highlights a valuation-driven thesis rather than a demand-driven one.
For investors, the contrast between Palantir’s operational momentum and Burry’s skepticism underscores a broader debate about AI stock pricing. While the company’s Rule of 40 score of 155 is exceptional, the market’s expectations may already reflect perfection. As seen with Korea’s AI chip stocks, leverage and sentiment can amplify swings in both directions.
Burry’s decision to exit Microsoft and Oracle while keeping Palantir short may signal that he sees the most asymmetric downside in Palantir’s valuation. Whether that bet pays off remains to be seen, but it serves as a reminder that even the strongest growth stories can face multiple compression when sentiment shifts.
This article is for informational purposes only and does not constitute financial advice.
