"The Big Short" Burry strikes again: Palantir (PLTR.US) is a consulting company inflated by the AI bubble, its valuation may drop below 100 billions

According to Golden Ten Data APP, renowned investor Michael Burry, the inspiration for the film "The Big Short," has once again issued a bearish call on Palantir (PLTR.US), criticizing the company’s valuation, business model, accounting practices, equity incentives, and CEO Alex Karp's spending on private aircraft, among other issues. He warned that Palantir’s valuation could ultimately fall below 10 billion dollars.

Fueled by the AI craze, Palantir's market capitalization has surged past 40 billion dollars, but Burry believes multiple warning signs lurk behind its high-growth narrative. In a now-unavailable post on the X platform, he stated: "Palantir is soaring again, but the facts haven’t changed."

Business Model Dispute: Consulting Company or Software Company?

Burry remarked that Palantir is more like a consulting firm than a pure software company. "Palantir is essentially a consulting firm swept up in a demand bubble fueled by AI-induced FOMO (fear of missing out)," Burry wrote on X.

He further warned that, even if the corporate AI spending cycle lasts several more years, "the downturn will be just as brutal, if not worse." He expects that Palantir’s valuation may ultimately drop below 10 billion dollars.

Regarding the business model, Burry focused his doubts on Palantir’s deferred revenue structure. He pointed out that Palantir’s ratio of deferred revenue to total revenue is about 32%, which is closer to consulting giant Accenture’s (ACN.US) roughly 31%, and far below the 80% to 207% level seen at subscription software companies like Salesforce (CRM.US) and ServiceNow (NOW.US).

Burry described this comparison as a "fatal blow" to Palantir’s "software narrative." He bluntly stated: "Palantir is misrepresented."

Surge in Accounts Receivable Raises Concerns

Burry also noted that Palantir’s accounts receivable are climbing rapidly, posing another risk. As of June 30, the company’s accounts receivable rose from 1.04 billion dollars at the end of 2025 to 1.49 billion dollars. Although no single client accounts for more than 10% of total revenue, one client’s accounts receivable make up as much as 27%.

Equity Incentive and Tax Controversies

Burry also criticized Palantir’s equity incentive plans and related tax benefits. The company’s 2025 pre-tax GAAP profit is about 1.6 billion dollars, yet it paid no federal cash taxes after using net operating loss carryforwards. Federal net operating losses increased from 5.5 billion dollars to 9 billion dollars, which Burry believes is mainly due to deductions related to equity incentives.

Burry stated: "Shareholders are paying for employees’ compensation through dilution. The government is subsidizing Palantir via massive tax breaks." He further noted that after repurchasing only about 75 million dollars in stock in 2025, Palantir then canceled its 1 billion dollar stock repurchase authorization.

CEO’s Private Jet Spending Criticized as “Extravagant”

Burry singled out CEO Alex Karp’s private jet expenses. Palantir disclosed that related expenditures reached 17.2 million dollars in 2025, up sharply from 7.7 million dollars the previous year.

Burry dubbed this spending “the 17.2 million dollar air club,” calling it “extravagant” and “outrageous.”

Burry is famed for correctly predicting the 2008 financial crisis. He has long held a bearish outlook on US stocks and is one of Wall Street’s most steadfast skeptics of the AI boom, increasing his short positions on stocks such as NVIDIA, Oracle, Palantir, Nebius, and Caterpillar.

However, ahead of NVIDIA’s latest earnings report, Burry bought call options while increasing his short positions. This move suggests that although he remains bearish, he anticipated a risk of a surge in share price if the earnings exceeded expectations. Ultimately, NVIDIA’s results beat estimates and guidance was optimistic, with shares jumping 8.74% in one day, confirming Burry’s short-term market forecast.