Hot AI stocks Nvidia and Palantir are falling today. Here’s why

Nvidia and Palantir shares are experiencing declines due to growing investor concerns about an artificial intelligence bubble. These worries are reminiscent of the dotcom bubble from the late 1990s and early 2000s. Prominent investor Michael Burry, famous for betting against the housing market before the 2008 crash, is now betting against these AI-focused companies. His firm, Scion Asset Management, has revealed it bought put options on Nvidia and Palantir. This news followed a cryptic social media post from Burry suggesting caution with AI stocks. Palantir CEO Alex Karp dismissed Burry's bearish stance, calling it "batshit crazy." Despite Burry's bets, Palantir recently reported strong third-quarter earnings with significant revenue growth. The fear of an AI bubble is widespread, with many investors and experts questioning the sustainability of current valuations. A Bank of America survey indicated that over half of investors believe AI stocks are in a bubble. However, these recent stock drops are minor compared to the substantial gains Nvidia and Palantir have seen recently. Nvidia's stock is up over 50% year-to-date, and Palantir has risen more than 150%.