Palantir shares have dropped 11% since the start of 2026, sliding from $177 to $158 by early August. A $100 bet placed on January 1 would sit at $89 today, a loss of $11. Michael Burry's bearish case appears to be working.
The legendary investor, famous for calling the 2008 crash, built his short position through put options in late 2025. His fund held options exposure tied to roughly five million Palantir shares worth about $912 million before deregistering. He's kept the pressure on, using both direct short exposure and put options while consistently hammering the same message: valuations are detached from reality, and AI hype is doing the heavy lifting.
The catch: business keeps growing
Here's where it gets messy. Despite the stock's slide, Palantir's actual business is accelerating. The company reported $1.63 billion in Q1 revenue, up 85% year-over-year. By Q2, which closed August 3, CEO Alex Karp told investors the entire operation had nearly doubled in 12 months. The stock even bounced 30% on the weekly chart after that earnings call.
So Burry's valuation thesis holds water. The stock was expensive relative to growth assumptions baked in at the time. But the company is proving those assumptions weren't completely nuts. Revenue is expanding faster than most software businesses can dream of. Palantir continues to land major government and commercial contracts. The AI enthusiasm, whatever its excesses, isn't entirely disconnected from what the company actually does.
The real question now is whether the 11% decline has done enough work to justify Burry's position or if Palantir's business momentum eventually drags the stock back up. For short-term traders watching the move, it's a clean win. For Burry's longer thesis, the jury's still out.
This piece is informational only and does not constitute financial advice or investment recommendations.
