The $1 Billion Bet Against AI: Is the Boom Over?

On November 5, 2025, markets in Asia were rattled by a sharp sell-off following Wall Street’s wild ride the previous day. The tech sector, especially AI-focused stocks like Nvidia and Palantir, took a big hit, sparking questions about whether the AI boom is sustainable.

But before jumping to conclusions, let’s dive deeper into what's going on and why India’s market might actually be in a better position than others.

Wall Street's Rough Ride

On November 4, the US saw massive losses. The Dow Jones Industrial Average dropped by 251.44 points (0.53%), settling at 47,085.24, while the S&P 500 fell by 1.17%, to close at 6,771.55. The Nasdaq Composite took the biggest hit, plunging 486.09 points (2.04%) to 23,348.64.

So, what triggered this steep decline? After hitting record highs just a day earlier, rising concerns over inflated valuations and the sustainability of the AI boom started to set in. The bubble, it seems, might be nearing its peak.

Asian Markets Follow Suit

Asia wasn’t immune to the selloff. MSCI’s Asia-Pacific Index dropped 2.3%, marking its sharpest fall since April 2025. In Japan, the Nikkei lost 4.69%, dipping below the 50,000 mark for the first time since October. South Korea’s Kospi saw a nearly 6% drop, with tech giants like Samsung and SK Hynix suffering major losses.

Even the smaller tech stocks were hit hard. The Kosdaq dropped 5.39%, while Hong Kong’s Hang Seng and China’s CSI 300 both felt the heat, losing 1.36% and 0.9%, respectively.

Fortunately, India’s stock market was closed for the Guru Nanak Jayanti holiday, sparing investors from this immediate sell-off.

The AI Boom: Is It Sustainable?

While AI companies like Nvidia are seeing record-breaking stock prices, there’s a growing concern that the sector’s rapid spending is outpacing its revenue. Praetorian Capital reports that AI companies are burning through a staggering $30 billion every month but only generating $1 billion in revenue. This unsustainable pace has many investors questioning whether AI companies can maintain their inflated valuations.

Michael Burry’s Big Bet: Shorting Nvidia & Palantir

Enter Michael Burry—famous for predicting the 2008 housing crash. Burry has placed a jaw-dropping $1.1 billion bet against Nvidia and Palantir, both AI stalwarts. In his most recent 13F filing with the US SEC, Burry has committed to:

• $186.5 million in put options against Nvidia
• $912.1 million in put options against Palantir

Burry’s concern? Despite their strong performance this year, he believes that the current valuations of Nvidia and Palantir are unsustainable, and he's betting that they’ll take a significant hit soon.

India's AI Strategy: A Blessing in Disguise?

While global powers like the US and China are spending trillions on AI, India’s approach has been far more cautious. With a modest AI budget of just $1.25 billion over five years, India’s measured pace might keep it out of the overhyped AI bubble.

While risks remain, like potential revenue cuts for IT firms due to AI-driven productivity improvements, India’s cautious approach might help it avoid the AI bubble burst that could hurt other markets.

Conclusion: India—The Safer Bet?

As global markets dive headfirst into AI, India’s slower, more strategic approach may turn out to be its greatest strength. With smaller investments in AI and a focus on traditional growth sectors, India may be able to sidestep the risks of an AI bubble that might soon burst elsewhere.

For investors looking for stability and long-term growth, India could be the safer bet. Sure, the Indian market has been in a sideways grind for almost a year now. It may feel like a lull, especially with things like FII outflows and rising tariffs. But here’s the thing—sideways markets aren’t wasted time. They’re actually accumulation phases.

For those with a disciplined mindset, this quieter period is the perfect chance to snap up quality stocks at competitive valuations and get ready for the next big rally.