Burry Doubles Down After Nvidia Pushes Back
When a company sends a private memo to Wall Street defending itself, you know things are getting interesting. That's exactly what happened with Nvidia Corp. (NVDA) after "Big Short" investor Michael Burry made waves with his bearish thesis on the AI darling.
Burry's response? He's not budging an inch.
"I stand by my analysis," Burry declared on X early Tuesday, directly addressing the chipmaker's rebuttal note. He made it clear his full thesis was too complex for social media soundbites and promised to release a detailed breakdown on his new Substack series, The Heretic's Guide to AI's Stars. Translation: this is just getting started.
The Enron Comparison Nobody Wanted
The tension escalated after reports emerged that Nvidia sent a memo to analysts specifically denying it resembled historical accounting frauds like Enron—a comparison Burry and other bears have alluded to. That's the kind of comparison that makes investor relations teams break out in cold sweats.
At the heart of Burry's argument is Nvidia's massive $112.5 billion share buyback program, which he claims provided "zero" shareholder value. His take? The buybacks simply offset dilution from employee stock compensation rather than actually returning value to shareholders. It's a provocative angle, and one that cuts to the core of how we think about corporate capital allocation.
Ming-Chi Kuo Enters the Ring
While Burry prepares what he calls his "heavier lift" counter-report, other prominent voices are jumping to Nvidia's defense. Famed tech analyst Ming-Chi Kuo posted his own rebuttal to the "fraud" narratives on Monday, specifically dismantling claims about Nvidia's Days Sales Outstanding (DSO) and inventory spikes.
"In my view, the reported figures are, in fact, consistent with basic financial common sense," Kuo wrote. He argued that rising DSO is perfectly standard when sales concentrate among a few cloud giants, and that the 32% inventory jump reflects preparation for the new Blackwell B300 chips—"far from being evidence of fraud."
Kuo's argument essentially boils down to this: when you're selling cutting-edge chips to a handful of massive customers with extended payment terms, and ramping up inventory for a major product launch, the numbers are going to look different than your average widget manufacturer. That doesn't make them fraudulent.
The Stock Keeps Climbing Anyway
Despite all this drama, Nvidia shares have been on a tear. The stock has outpaced the broader market this year, climbing 31.99% year-to-date compared to returns of 18.63% for the Nasdaq Composite and 18.58% for the Nasdaq 100.
On Monday, the stock finished the regular session up 2.05% at $182.55 per share, before falling 1.50% in extended trading. Over the past year, shares have gained 34.21%.
The technical picture shows a stronger price trend over the long term and a weak trend in the short and medium term, with a poor value ranking according to market data.
What we're witnessing here is the battle over Nvidia's valuation shifting from short tweets to long-form forensic analysis. Burry clearly believes the market is missing something important about how Nvidia's financials should be interpreted. Whether he's right or not, we're about to get a much deeper dive into the mechanics of AI chip economics.