Michael Burry Calls Palantir Stock 'Sand Castle' Amid Decline, Boosts Alibaba Stake

Michael Burry, the famous “Big Short” investor, has once again sounded alarms over Palantir Technologies, describing the company’s stock as “a sand castle” and highlighting its prolonged decline. In a post shared on social media platform X (formerly known as Twitter) Burry shared a chart noting Palantir had made a “new lower low” after a “low volume top,” adding the phrase: “rock rock til you drop.” Palantir shares traded near fresh 52-week lows on Tuesday, pressured by a broader selloff in software and artificial intelligence stocks. Burry emphasized that trading volume “fell into the top and still has not recovered as it falls,” underscoring the stock’s downtrend.

AI favourite faces valuation reset

Palantir was once a major beneficiary of the AI rally, buoyed by adoption of its Artificial Intelligence Platform (AIP) and government software contracts. However, investors are now questioning whether richly valued software companies can sustain the growth needed to justify premium valuations. Shares of Palantir are down about 30% year-to-date and nearly 19% lower over the past year, reflecting mounting skepticism about its long-term trajectory.

Tech selloff adds pressure

Tuesday’s selloff was triggered by steep declines in South Korean memory-chip stocks, with Samsung Electronics and SK Hynix each losing more than 12%. While both recovered some ground on Wednesday — Samsung up 10% and SK Hynix up 1% — the retreat spilled over into U.S. and European markets, hitting AI-linked equities hard. Palantir, already under pressure, was among the software names most affected as investors pulled back from some of the market’s biggest technology winners.

Michael Burry invests in Chinese stock BABA

Recently, Burry revealed that he has increased his position in Alibaba Group (BABA). According to a report by Stockwits, in a Substack post, Burry said he purchased additional shares at $111.90, describing the Chinese tech giant as “the most advanced company in China as far as AI strategy goes.” Burry’s bullish stance on Alibaba comes as his fund has taken positions against U.S. AI leaders like Nvidia and Palantir. He has repeatedly warned that valuations in the American AI sector are inflated by hype rather than sustainable fundamentals, contrasting them with what he sees as undervalued opportunities in China. Burry highlighted, Alibaba’s ongoing stock repurchase program as a key factor in his investment thesis, arguing that buybacks are boosting shareholder value even though the market has yet to fully recognise it. He added: “The stock is well-off recent highs. When the time comes, the stock will launch fast and fly high.” Alibaba has committed $56 billion over three years to expand its AI footprint, including cloud computing, semiconductors, and model deployment.