Buffett’s cash hoard hits record $397bn as Burry shorts AI for $1bn

Warren Buffett’s Berkshire Hathaway has accumulated a record $397 billion in cash reserves, a move the chairman attributes to a scarcity of attractive investment opportunities and a market sentiment he describes as akin to gambling. Speaking to CNBC, Buffett noted that in his 60 years in business, only five periods have offered compelling buying opportunities, suggesting that current valuations do not justify deploying capital. This restraint contrasts sharply with the aggressive buying seen elsewhere, as institutional investors continue to pour money into technology stocks despite the growing wariness from veteran market observers.

In a parallel move signalling deep scepticism, Michael Burry’s Scion Asset Management shorted artificial intelligence stocks for approximately $1 billion in 2025. According to SEC filings, Scion purchased $187.6 million in put options on Nvidia and $912 million in puts on Palantir. Burry, who famously predicted the 2008 housing market crash, has likened the current environment to the 1999-2000 dot-com bubble, arguing that stock prices are rising due to momentum rather than fundamental indicators such as jobs data or consumer sentiment.

The targets of Burry’s short positions have been significant beneficiaries of the AI wave, with both Nvidia and Palantir seeing substantial valuation increases. Palantir’s trailing 12-month price-to-earnings ratio currently exceeds 150, reflecting the high optimism surrounding the sector. Burry’s strategy mirrors his historical approach of identifying bubbles before they burst, a tactic that has drawn attention from investors wary of the sustainability of current tech valuations.

While the current mood is cautious among some, others remain bullish on the long-term potential of the technology sector. Amazon, for instance, reported fourth-quarter fiscal 2025 results with $213.4 billion in revenue and $25 billion in operating income, beating expectations. Following this report, Amazon shares rose 31.9% in a single month, driven by strong investor demand and unusual buy pressure from large institutions, highlighting the divergent views on market direction.

Buffett’s approach has historically been to maintain large cash reserves when valuations are high, adhering to his philosophy of being fearful when others are greedy. He has previously deployed cash during market crashes, such as his 2008 investment in Goldman Sachs preferred stock, which yielded a profit of roughly $3.7 billion when the shares were redeemed in 2011. This strategy underscores the potential for significant gains when market conditions eventually correct, provided investors have the liquidity to act.

The comparison to the dot-com era is often tempered by the reality that some companies survived the bust to dominate their sectors. Amazon, which suffered during the 1999-2000 bubble, is now worth approximately $2.9 trillion, while Nvidia, which went public in 1999, is the world’s most valuable public company at over $5 trillion. The key question for investors remains which companies hold durable value and when the optimal time to enter the market will be.

Despite the current caution, Buffett maintains a long-term optimism about the US economy. In his 2020 letter to shareholders, he wrote that despite severe interruptions, the country’s economic progress has been breathtaking, concluding with the advice never to bet against America. This perspective suggests that while short-term corrections may be imminent, the underlying economic engine remains robust, even as individual stock valuations face scrutiny.