💣'Big Short' Investor Bets $1 billion on AI Crash

The cracks are starting to show in the AI gold rush.

The “Big Short” investor who predicted the 2008 housing crash just made a billion-dollar bet against the AI boom. Meanwhile, China banned American-made AI chips from its state data centers, cutting Nvidia and AMD out of one of their biggest markets.

xAI quietly rolled out Grok’s new update, which Elon Musk called a “major leap” in reasoning and video generation. And Microsoft introduced its plan for Humanist Superintelligence, a vision of AI built to amplify human capability instead of replacing it.

Let’s get into it.

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AI & Finance

The Big Short 2.0? Michael Burry Just Bet $1 B That the AI Boom Will Burst

The man who called the 2008 housing crash is back, and this time his target is AI.
Michael Burry, the investor made famous by The Big Short, has placed a $1.1 billion wager against two of the market’s biggest winners: Nvidia and Palantir. To him, the current AI craze looks too familiar. Endless optimism, record valuations, and a belief that the story can only keep going up

💣 What’s Happening

• Scion Asset Management, Burry’s fund, disclosed put-option positions tied to roughly 1 million Nvidia shares (≈ $187 million notional) and 5 million Palantir shares (≈ $912 million notional) in its latest SEC 13F filing for Q3 2025.

• Nvidia designs the chips that power systems like ChatGPT and Tesla’s driver-assist technology.

• Palantir builds AI platforms used by governments and major enterprises for data analysis.

• Nvidia’s valuation surpassed $5 trillion in late October 2025, briefly making it the world’s most valuable company.

• Palantir’s stock has climbed more than 170 percent YTD, fueled by investor excitement around defense and enterprise AI.

📉 Why He’s Skeptical

• Everyone is chasing the same story. Anything labeled “AI” attracts massive money, often faster than it earns it.

• Spending is surging. Tech giants are investing billions in data centers without knowing if demand will match the buildout.

• Prices reflect belief, not results. Investors are paying for a perfect future before it arrives.

• History has a rhythm. In 2008, people believed housing could never fall. Burry sees the same blind spot forming around AI.

🧭 Why It Matters: Artificial intelligence is reshaping every industry, but bubbles are built on confidence, not code. Burry isn’t arguing against AI’s future. He’s questioning whether today’s prices already assume too much of it. Every revolution starts with innovation. Every bubble starts when no one asks what it’s worth.

👉 Explore: Scion Asset Management Q3 Filing

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xAI Quietly Supercharges Grok: Faster Reasoning and Instant Video

Grok just got a stealth boost. xAI rolled out a quiet upgrade to Grok-4-Fast, lifting reasoning accuracy to 94.1% and non-reasoning performance to 97.9%, while adding Grok Imagine. This new text-to-video generator can render clips in under 17 seconds. Elon Musk confirmed the update on X, calling it a “major upgrade” refined behind the scenes before release.

🚀 What’s New

• Reasoning accuracy: Up from roughly 77% → 94%, closing the gap with GPT-4 and Claude 3 on logic-based benchmarks.

• Non-reasoning tasks: Up from 78% → 98%, making Grok one of the fastest large models to approach near-perfect completion rates.

• Speed edge: Processes prompts up to 25% faster with lower latency at scale, keeping response quality consistent.

• Video generation: New Grok Imagine tool creates short clips in multiple aspect ratios in under 17 seconds — ideal for creators and meme workflows.

• 2 million-token context: Expands memory depth for longer reasoning chains and persistent chat sessions.

xAI is chasing usability over spectacle. Grok-4-Fast now combines near-GPT-level reasoning with faster turnaround and lower compute cost — the kind of efficiency that defines real-world adoption. If these gains hold outside benchmarks, Grok’s edge won’t be raw IQ, it’ll be how quickly it turns reasoning into results.

👉 Try the new Grok update and test Grok Imagine yourself

World · AI Hardware

China Blocks Nvidia, Pushes Local AI Chips

Beijing has instructed all state-funded and state-backed data centers still under construction to remove foreign AI chips from Nvidia, AMD, and Intel and replace them with Chinese-made processors. The rule applies to projects less than 30 percent complete, requiring developers to redesign their systems before launch.

It is a direct move to secure control of the compute layer, the foundation behind every large-scale AI model China plans to build.

🔧 Inside the Shift

• Scope: Applies to government-backed data centers still in early construction, with local officials already enforcing it in Shanghai, Shenzhen, and other AI hubs.

• Foreign exits: Nvidia’s H20, AMD’s MI300, and Intel’s Gaudi accelerators are the primary chips affected.

• Domestic replacements: Huawei’s Ascend, Cambricon, MetaX, and Moore Threads are filling the gap through new state contracts.

• Strategic context: With U.S. export rules blocking access to high-end AI chips, China is accelerating local design to prevent future supply disruptions.

🧭 The Bigger Picture

China is trading short-term speed for long-term security. By mandating domestic chips in government infrastructure, it is reducing reliance on U.S. technology and creating a stable base for its next generation of AI systems.

For Nvidia, it is a major loss. China accounts for roughly a quarter of global data center demand, and even export-compliant chips are now excluded from public projects. For Beijing, it is a calculated shift toward self-sufficiency that strengthens its grip on the hardware driving its digital future.

The global AI race is no longer just about model intelligence. It is about who controls the machines that make intelligence possible.

👉 See how China’s chip strategy could reshape the global AI balance

Superintelligence

Microsoft Launches a Team to Build Humanist Superintelligence

Microsoft has formed the MAI Superintelligence Team, a new division focused on creating AI systems that extend human expertise while staying aligned with human intent. The goal is not to build a general brain that does everything but to design specialized intelligences that can reason, discover, and collaborate with people in science, medicine, and engineering.

The company calls this vision Humanist Superintelligence, an approach to AI built to amplify human progress rather than replace it. Led by CTO Kevin Scott, the team brings together talent from Microsoft Research, Nuance, and OpenAI collaborations to create systems that think with purpose and precision. If it works, it could redefine how technology contributes to discovery itself.

👉 Read Microsoft’s full post on “Towards Humanist Superintelligence.”

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