Michael Burry Thinks Anthropic is Eating the Lunch of Palantir — Is He Right?

Dr. Michael Burry of The Big Short fame doesn’t seem to be willing to back down as a bear in the epic tug-of-war with Palantir (NASDAQ:PLTR | PLTR Price Prediction) shareholders and the great CEO Alex Karp. Undoubtedly, Burry seemed to have been getting his way, with shares of Palantir plunging viciously into a bear market amid one of the worst software slumps in recent memory.

But after a strong rally in the broader markets heading into mid-March over hope that the Iran war will end soon, it feels like the battle between the bulls and the bears (especially among the shorts and longs) is about to get tougher to call.

I’ll admit that bearish remarks, especially by a man as brilliant as Michael Burry, seem to have more of an impact when the overall market mood is in a bad spot.

But, just like that, the S&P 500 is at a new all-time high, and suddenly, it feels good to be back, not only in stocks or tech plays, but also in the fallen software companies that were pretty much untouchable just a few weeks ago when the threat of AI shocked many, acting as some sort of wake-up call for the industry.

Software is coming back, even amid Anthropic’s disruptive impact

While Anthropic has only advanced AI further since the software slump of the SaaS-pocalypse began, I do think that investors are starting to come to the conclusion that they overreacted in a moment of panic.

When a “magical” piece of new tech (and yes, AI does feel magical sometimes) comes along, doing amazing things like catching bugs galore across a slew of applications, it’s only natural to think about what could happen if we’re just scratching the tip of the iceburg when it comes to what the tech could be capable of in just a few years or even a few months.

Could it be that markets will stop overreacting to new Anthropic or OpenAI tools when a new breakthrough is released, just like it’s seemingly moved on from the Iran war?

Time will tell. I guess it depends on the magnitude of the breakthrough we’re talking about and whether the AI disruptor is actually able to weigh on growth and margins of a targeted software firm. In any case, it’s an unprecedented time, and with so much uncertainty about who loses or wins amid AI’s rise, it can be hard to know how to react. That is, if any reaction is necessary!

It’s hard to know which firms will be impacted by Anthropic’s disruptive reach

In any case, when Michael Burry says things like Anthropic could steal Palantir’s lunch, it’s hard to buy the dip, even if you were previously bullish on the firm and the momentum riding behind its AI Platform. Time will tell whether it’s Burry, in the red corner, or Karp, in the blue corner, that will have the last laugh.

Anthropic could certainly disrupt a number of software firms with a “plug-and-play” kind of model. That’s the main fear. And I won’t be the first to admit that the disruptive potential of managed agents is a bit unsettling. If Anthropic’s agents can move fast, perhaps the barriers to entry could be lowered. Of course, let’s not forget that Palantir and other firms won’t be standing still as they look to level up their own agents. 

If Anthropic’s AI is powerful enough to upend some leaders in the AI software scene, is AI still in a bubble, as Burry suggested previously?

Either way, I’ve noted in prior pieces that Burry might be able to win on his bearish bets, even if he’s wrong about AI, as a whole, being in a bubble. Palantir is a very expensive stock on nearly every metric. And when expectations call for perfection, it gets harder to keep that applause going. Where Burry sees a “wrapper,” others see immense value in the ontology.

Personally, I think Palantir is more than just a “wrapper,” but I’m unsure how far Anthropic and other frontier model makers will go. As such, I’m staying on the sidelines, even if Palantir stock has another double up its sleeves as software makes a comeback.