Nvidia Palantir AI Bubble Prompts Investor Skepticism
Nvidia Palantir AI bubble fuels valuation debate as Palantir raised guidance and large put purchases signal hedging pressure on ETF flows.
KEY TAKEAWAYS
- Palantir posted 62.8% Q3 revenue growth and raised FY2025 revenue guidance to $4.4 billion.
- Michael Burry's fund bought $1.1 billion in put options against Nvidia and Palantir.
- Palantir traded at more than 200x forward price-to-earnings and about 151x EBITDA, raising valuation risk.
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Nvidia Corporation (NVDA) and Palantir Technologies Inc. (PLTR) reported divergent signals on Nov. 7, 2025, fueling debate over an AI investment bubble. Palantir raised its 2025 revenue guidance while a report said Michael Burry’s fund bought put options against both companies, splitting retail bullishness and institutional caution.
Palantir’s Growth and Valuation Concerns
Palantir posted third-quarter 2025 revenue growth of 62.8% year over year and raised its full-year revenue guidance to $4.4 billion, citing accelerating contract wins and broader enterprise adoption, according to Seeking Alpha. The company also recorded its largest contract wins to date.
Despite this momentum, Seeking Alpha described Palantir’s valuation as extremely stretched. The stock trades at more than 200 times forward price-to-earnings (P/E) and about 151 times EBITDA, a proxy for operating profit. Skepticism remains over whether Palantir can sustain the growth rates implied by these multiples, raising concerns that expectations are already priced into the shares independent of near-term margin trends.
Wedbush analyst Dan Ives projects Palantir could reach a $1 trillion market capitalization within three years, citing its “gold standard” AI software and strong position in enterprise deployments. This bullish forecast contrasts with valuation worries, broadening the range of investor expectations.
Investor Bets and AI Market Scale
A Motley Fool report said Michael Burry’s fund purchased $1.1 billion in put options against Nvidia and Palantir in the third quarter of 2025. The report noted the absence of primary SEC filings confirming these positions but highlighted the scale of the trades as an example of institutional hedging amid heavy retail interest.
Industry projections estimate global investment in AI infrastructure could reach $7 trillion by 2030. The report cited OpenAI’s $38 billion chip deal with Amazon as a demonstration of commerce at scale in the sector.
Nvidia recently surpassed a $5 trillion market capitalization, driven by surging demand for AI chips. Palantir’s stock has climbed roughly 2,710% since January 2023. These divergent trajectories illustrate the market’s debate over which business models will generate sustained free cash flow as AI spending matures.
ETF Trends reported a split among market participants: retail investors remain broadly bullish, while institutional investors and some funds express growing concern about stretched valuations. This divide has influenced flows into ETFs and active strategies focused on AI.
Together, these results, analyst projections, and high-profile hedges highlight the central debate in the AI trade: whether the large addressable market and contract momentum justify current valuations or if rising institutional caution will limit further gains.
