The battle for AI supremacy has gotten political.

President Trump is defending Palantir Technologies (PTLR) after “Big Short” investor Michael Burry blasted the company for losing its software edge earlier this week.

In a Truth Social post, the president claims Palantir has “great war fighting capabilities and equipment.” He even dared critics to “just ask our enemies.” Palantir stock jumped following the bold-faced declaration before falling again. Year to date, the stock is down nearly 30%.

Read more about Palantir’s stock moves and today’s market action.

The quarrel over Palantir comes shortly after Burry claimed that AI startup Anthropic (ANTH.PVT) had been effectively “eating Palantir’s lunch.”

In an X post that has since been deleted, the Scion Asset Management founder pointed to Anthropic’s explosive climb from $9 billion to $30 billion in annual recurring revenue (ARR) as evidence that businesses are pivoting toward “easier, cheaper, [and more] intuitive” solutions.

Burry then compared that to Palantir’s slow-burn journey, noting that it took the software company 20 years to hit the $5 billion mark. According to him, Palantir’s government-heavy portfolio acts as a low-margin anchor. Palantir closed Thursday trading down 7%.

This isn’t a new crusade for Burry. The contrarian has been consistently bearish on Palantir, disclosing a significant short position via long-dated put options back in September 2025, betting largely on a multiyear decline.

At its core, Burry’s thesis rests on the idea that Palantir operates like a consulting firm rather than a pure software play. He argues the company relies too heavily on its forward-deployed engineers (FDE), who often work on-site with customers for months to maintain the system. This makes the business model difficult to scale compared to off-the-shelf AI solutions like Anthropic’s Claude.

Trump’s validation, however, shifts the focus. While Anthropic scales rapidly in the commercial sector — namely through deals such as a recent multiyear agreement with CoreWeave (CRWV) — Palantir is banking on national security.

With markets at the whims of Trump’s emotional discernment, Palantir, at least for now, is in his good graces. This stands in stark contrast to Anthropic, which fell out of favor in March after a dispute with the DoD over AI safety guardrails. The administration has subsequently labeled the AI lab a potential threat to national security.

Francisco Velasquez is a Reporter at Yahoo Finance. Follow him on LinkedIn and X. Story tips? Reach him via email at francisco.velasquez@yahooinc.com.