The Great AI Divide: How Buffett and Burry Stand on Opposite Ends of the Long-Term vs Short-Term Spectrum

Two Legendary Investors, Two Contrasting Bets

The investment world recently witnessed a fascinating divergence in strategy between two of its most celebrated minds. Warren Buffett, who has orchestrated Berkshire Hathaway into a decades-long wealth-creation machine, and Michael Burry, the shrewd fund manager who famously shorted the housing market before 2008, found themselves on opposite sides of the artificial intelligence (AI) boom during the third quarter.

Buffett initiated a position in Alphabet (NASDAQ: GOOGL/GOOG), while Burry’s Scion Asset Management deployed [put options]( against both Nvidia (NASDAQ: NVDA) and Palantir (NASDAQ: PLTR). The question isn’t simply who picked the right stock—it’s fundamentally about which investment philosophy will prevail over the decades to come.

Burry’s Case Against the AI Narrative

Burry’s bearish stance rests on two pillars: valuation extremes and questionable accounting practices.

Palantir’s Valuation Trap

The enterprise software company sports a [price-to-sales]( ratio of 110—a figure that would make even seasoned growth investors wince. This mirrors the irrational exuberance of the dot-com bubble, when companies with astronomical multiples eventually crashed back to earth. History suggests that elevated valuations, no matter how justified they seem in the moment, often compress when market sentiment shifts.

The Accounting Anomaly

Burry has flagged a more troubling concern: major AI infrastructure consumers—Amazon, Microsoft, Alphabet, and Meta Platforms—are [depreciating their AI infrastructure]( over timelines that exceed the actual useful life of the underlying technology. Given that Nvidia’s GPU [product lifecycle]( averages just 18 to 24 months, Burry contends this represents a coordinated accounting exercise that inflates near-term profitability at the expense of future earnings clarity.

Since Burry filed his position on November 3, Palantir and Nvidia shares have declined 19% and 13%, respectively (as of December 1). On the surface, his thesis appears vindicated—at least in the short term.

Buffett’s Patient Calculation

The Oracle of Omaha’s playbook tells a different story. For three years, while the broader investment community chased AI euphoria, Berkshire accumulated cash and became a net seller of equities, trimming positions in Apple and other mega-cap holdings. Buffett was neither dazzled by the AI narrative nor paralyzed by fear—he was simply waiting.

His third-quarter purchase of Alphabet wasn’t impulsive. The company checks every box in Buffett’s investment framework: it commands a more reasonable valuation than peers in the “Magnificent Seven,” maintains fortress-like brand recognition, generates consistent profitability, and operates a diversified business ecosystem.

But there’s a deeper layer. Alphabet has successfully woven AI into its core platforms—Google and YouTube—while reinvigorating its cloud infrastructure division to compete credibly against Microsoft Azure and Amazon Web Services. This isn’t speculation; these are documented revenue accelerations and earnings contributions happening in real time.

The Real Difference: Time Horizon

Here’s where the analysis becomes crucial. Burry’s strategy mirrors the mentality of a [day trader]( —extract profits from short-term dislocations and move on. That he’s likely profited from his put options doesn’t validate his long-term thesis; it merely confirms that tactical trades can generate returns even when the underlying narrative remains intact.

Buffett’s decision to establish an Alphabet position three years into the AI revolution carries a contrasting implication: he sees enduring value in a market that others perceive as temporary euphoria. This is quintessentially Buffett. He doesn’t chase narratives; he waits for them to mature, identifies the genuine beneficiaries, and commits capital at reasonable prices for the long haul.

The key distinction is this: Just because a position moves in your favor doesn’t mean you understood the system correctly. Burry may profit from volatility; Buffett is positioning for secular transformation.

The Long-Term Verdict

Burry’s skepticism about accounting practices and valuation excess has merit in any framework. However, his bearish stance appears calibrated for a specific timeframe—the next few quarters or perhaps the next year or two. Within that window, mean reversion can and does occur.

Buffett’s contrarian instinct suggests he believes AI’s impact will prove durable across multiple macroeconomic cycles. He’s betting that Alphabet, specifically, has the operational leverage, market position, and competitive moat to capture disproportionate value as AI matures from hype cycle to essential infrastructure.

The uncomfortable truth is that both investors could be right—just on different timescales. But Buffett’s framework—holding for decades, requiring companies to demonstrate genuine earnings power, and resisting the urge to trade around noise—has historically generated more durable wealth than the alternative.

In the battle between the short-term trader and the long-term architect, history has rendered its verdict many times over.