Palantir Technologies (PLTR-US) delivered better-than-expected third-quarter earnings on Tuesday (Nov. 5), but the stock still tumbled 8% in after-hours trading. The drop came amid heightened scrutiny of AI valuations and a very public spat between Palantir CEO Alex Karp and famed short seller Michael Burry.
Karp vs. Burry: A War of Words
On a televised program, Karp directly called out Burry, whose hedge fund Scion Asset Management disclosed large put option positions against both Palantir and Nvidia (NVDA-US) in its latest 13F filing.
Karp didn’t mince words:
- He labeled Burry’s decision to short Palantir and Nvidia "simply insane," arguing that betting against the companies was effectively "shorting AI."
- He suggested short selling in this context bordered on "market manipulation," adding that Palantir had delivered its "best performance ever."
- Karp went further, saying he would "celebrate when [Burry is] wrong," framing the short bet as misguided given Palantir’s profitability and growth trajectory.
Burry, best known for predicting the 2008 housing collapse—a trade immortalized in The Big Short—has recently warned of another potential market bubble. His fund’s filings show $912 million in notional value puts on Palantir and $187 million on Nvidia, though the documents don’t reveal strike prices or expiration dates.
Stock Market Reaction
Despite reporting better-than-expected Q3 results and issuing an optimistic outlook, Palantir shares fell sharply. The company remains up more than 150% year-to-date, but its forward P/E ratio of 228 has left many investors cautious.
Nvidia, another AI bellwether, also slipped 4% on Tuesday, marking its fifth straight day of losses. The declines highlight growing investor unease over whether AI valuations can be sustained, even as fundamentals remain strong.
Palantir’s Earnings Snapshot
- Revenue: Beat expectations, supported by government contracts and expanding commercial adoption.
- Profitability: Continued improvement, reinforcing Karp’s claim of "extreme profitability."
- Guidance: Management struck an optimistic tone, citing AI-driven demand for its platforms.
Still, the market reaction suggests that valuation concerns outweighed fundamentals, at least in the short term.
Burry’s Broader Warning
After a two-year hiatus from public commentary, Burry recently resurfaced with a warning about speculative excess. On X (formerly Twitter), he posted a still from The Short Seller film, showing the actor portraying him staring blankly at a computer screen—a not-so-subtle hint at his skepticism toward today’s AI-driven rally.
The Bottom Line
The clash between Alex Karp and Michael Burry underscores the divide in today’s market: bulls see AI as a once-in-a-generation growth engine, while skeptics warn of stretched valuations and bubble-like behavior.
For now, Palantir’s fundamentals remain strong, but with shares priced for perfection, even an earnings beat wasn’t enough to prevent a selloff. Whether Burry’s bearish bets prove prescient—or whether Karp gets to celebrate—will be one of Wall Street’s most closely watched storylines heading into 2026.