Nvidia stock drops 5.7% after Michael Burry reveals $187M put position

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Nvidia stock drops

Highlights

- Nvidia fell 5.7% to $195.01 as Michael Burry disclosed a $187M put option bet against the stock.

- Technicals show weakening momentum, with $185–190 as critical support and downside risk toward $165 if breached.

- The move highlights growing skepticism around stretched AI valuations and overbought tech names.

From a chart perspective, $205–210 now forms a significant resistance level, representing both recent highs and a psychological barrier. On the downside, the area between $185 and $190 emerges as immediate support. This range previously served as a base for late October consolidation and aligns with the rising 50-day moving average, making it a critical inflection zone.

The Relative Strength Index (RSI) has slipped toward the 50 level, signaling waning momentum. Volume on recent down days has increased, suggesting institutional selling or unwinding of leveraged positions. The broader trend remains technically bullish on a medium-term basis, with the 200-day moving average still well below current prices. However, short-term signals point to an increasing probability of a deeper retracement.

Nvidia stock price dynamics (September 2025 - November 2025). Source: TradingView

If the $185–190 support range breaks on high volume, the next key technical area is around $165–170, which corresponds to a prior breakout region and the neckline of the August–September consolidation zone. Such a move would represent a technical correction of roughly 15% from recent highs and reset stretched valuation multiples. This level also aligns with the volume profile’s point of control, indicating strong historical interest from buyers and sellers.

Burry’s put option bet sparks AI valuation debate

Investor sentiment was rattled after regulatory filings revealed that Michael Burry’s Scion Asset Management placed large put option bets against Nvidia during Q3. The notional value of the Nvidia-related puts exceeded $187 million, making it one of Scion’s largest bearish positions of the year. Burry, famous for predicting the 2008 housing crash, has increasingly positioned himself against perceived speculative bubbles — and AI stocks are now in his crosshairs.

This public disclosure reignited debate around the sustainability of Nvidia’s valuation, which has soared alongside the AI infrastructure boom. Nvidia has been one of the biggest beneficiaries of the current AI arms race, as demand for its high-performance GPUs surged from hyperscalers and cloud providers. However, some analysts now warn that much of this future growth is already priced in.

Valuation metrics underline the concern: Nvidia trades at over 35 times forward earnings and more than 20 times sales — figures that leave little margin for error. Moreover, recent U.S. government restrictions on advanced chip exports to China could limit Nvidia's future revenue from key overseas markets, adding another layer of uncertainty. Burry’s bearish stance may not be a timing bet but rather a macro signal: that AI mania is running hot, and companies like Nvidia are over-owned and over-levered to a single narrative. Whether his view proves accurate or early remains to be seen, but the market reaction to the news indicates that other institutional players are at least beginning to hedge.

Scenarios point to near-term volatility, downside risk

Base case expectations now center on a period of sideways consolidation. If Nvidia can hold the $185–190 support level, the stock may stabilize and trade within a $190–205 range for the next few weeks. This would represent a healthy pause in the uptrend, allowing earnings momentum or new product developments to reassert investor confidence. A flat trading range would also help cool off technical indicators like RSI and MACD, which have been signaling overbought conditions in recent weeks.

In the bearish scenario — increasingly probable given technical and sentiment deterioration — Nvidia breaches the $185 floor and declines toward $165. That would align with a broader derating of high-growth tech, especially if macro headwinds (rates, geopolitical tensions, or chip regulation) worsen in Q4. A move below support could also trigger algorithmic selling and margin calls, accelerating downside momentum beyond fundamental drivers.

Jefferies raised its Nvidia price target to $240 from $215, citing strong demand for AI and data center products. The analysts highlighted improved order visibility, especially for high-performance GPUs used in generative AI and hyperscale cloud applications.

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