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Michael Burry Takes Aim at Nvidia: 'The Math Just Doesn't Work'

MarketDash Editorial Team
2 hours ago
The investor famous for calling the 2008 housing crash is now shorting Nvidia, arguing that AI chip spending has raced far ahead of actual revenue-generating applications. Here's why he's avoiding bets against Meta, Microsoft, and Alphabet.

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Michael Burry, the investor who made his name predicting the 2008 housing collapse, has found his next short: Nvidia Corp. (NVDA). And he's not being subtle about it.

The Nvidia Math Problem

In a Substack post over the weekend, Burry laid out why he's betting against the AI chip darling. His argument is simple but striking: Nvidia is "simply the purest play" on artificial intelligence, which makes it dangerously exposed when the numbers don't add up.

"I do not see how that math works," Burry wrote, pointing out that Nvidia could sell roughly $400 billion worth of chips this year while actual revenue-generating AI applications are generating "less than $100 billion in application layer use cases."

That's a pretty significant gap. Companies are spending wildly on AI infrastructure, but the actual money-making applications haven't caught up. Burry sees Nvidia as "the most loved, and least doubted" stock in the AI trade, which in his view creates an attractive short opportunity because sky-high expectations leave almost no room for disappointment.

Why Other Tech Giants Get a Pass

Burry also explained why he's not shorting other AI-heavy companies like Meta Platforms Inc. (META), Alphabet Inc. (GOOG) (GOOGL), or Microsoft Corp. (MSFT). The answer comes down to business fundamentals.

Betting against Meta would mean shorting "its social media/advertising dominance," he wrote. Going after Microsoft would be "shorting a global office productivity SaaS goliath." These companies have massive, profitable core businesses that could cushion the blow if AI spending doesn't pan out.

They're not "pure shorts on AI," Burry said. They can afford to lose money on artificial intelligence experiments because their cash-generating businesses will keep humming along. That's not the case with Nvidia, which is far more dependent on continued hyperscaler spending.

Burry also flagged another risk at Nvidia: technological obsolescence. The company releases new chip solutions every year or less, which raises the possibility of future writedowns as older inventory loses value.

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Weekly insights + SMS (optional)

Meta's 'Saving Grace' Abandoned

On Monday, Burry took a shot at Meta after CEO Mark Zuckerberg announced plans to dramatically expand AI capacity. Burry warned that the company was ditching its historically asset-light business model for a capital-intensive strategy that could hammer returns.

Meta was "throwing away its one saving grace," he wrote, cautioning that return on invested capital could decline as AI spending accelerates.

Oracle and the Cloud Debt Pile

Burry isn't just bearish on Nvidia. He also revealed he owns put options and has shorted Oracle Corp. (ORCL), citing the company's cloud computing expansion and rising debt load. Oracle shares have fallen roughly 40% from their September peak, vindicating his position so far.

The Power Problem Nobody's Solving

In a separate post, Burry urged President Donald Trump and Vice President JD Vance to fast-track a $1 trillion nuclear power and grid expansion to keep up with AI-driven electricity demand. He warned that energy shortages could choke off innovation and economic growth.

Futurum Group CEO Daniel Newman echoed the concern, saying that regulatory delays around power infrastructure represent the biggest threat to sustaining the AI boom. You can build all the data centers you want, but if there's no juice to run them, the party's over.

Burry's bet is clear: the AI infrastructure spending spree has gotten ahead of itself, and Nvidia is the most exposed name when reality catches up.

Michael Burry Takes Aim at Nvidia: 'The Math Just Doesn't Work'

MarketDash Editorial Team
2 hours ago
The investor famous for calling the 2008 housing crash is now shorting Nvidia, arguing that AI chip spending has raced far ahead of actual revenue-generating applications. Here's why he's avoiding bets against Meta, Microsoft, and Alphabet.

Get Alphabet Inc. (Class C) Alerts

Weekly insights + SMS alerts

Michael Burry, the investor who made his name predicting the 2008 housing collapse, has found his next short: Nvidia Corp. (NVDA). And he's not being subtle about it.

The Nvidia Math Problem

In a Substack post over the weekend, Burry laid out why he's betting against the AI chip darling. His argument is simple but striking: Nvidia is "simply the purest play" on artificial intelligence, which makes it dangerously exposed when the numbers don't add up.

"I do not see how that math works," Burry wrote, pointing out that Nvidia could sell roughly $400 billion worth of chips this year while actual revenue-generating AI applications are generating "less than $100 billion in application layer use cases."

That's a pretty significant gap. Companies are spending wildly on AI infrastructure, but the actual money-making applications haven't caught up. Burry sees Nvidia as "the most loved, and least doubted" stock in the AI trade, which in his view creates an attractive short opportunity because sky-high expectations leave almost no room for disappointment.

Why Other Tech Giants Get a Pass

Burry also explained why he's not shorting other AI-heavy companies like Meta Platforms Inc. (META), Alphabet Inc. (GOOG) (GOOGL), or Microsoft Corp. (MSFT). The answer comes down to business fundamentals.

Betting against Meta would mean shorting "its social media/advertising dominance," he wrote. Going after Microsoft would be "shorting a global office productivity SaaS goliath." These companies have massive, profitable core businesses that could cushion the blow if AI spending doesn't pan out.

They're not "pure shorts on AI," Burry said. They can afford to lose money on artificial intelligence experiments because their cash-generating businesses will keep humming along. That's not the case with Nvidia, which is far more dependent on continued hyperscaler spending.

Burry also flagged another risk at Nvidia: technological obsolescence. The company releases new chip solutions every year or less, which raises the possibility of future writedowns as older inventory loses value.

Get Alphabet Inc. (Class C) Alerts

Weekly insights + SMS (optional)

Meta's 'Saving Grace' Abandoned

On Monday, Burry took a shot at Meta after CEO Mark Zuckerberg announced plans to dramatically expand AI capacity. Burry warned that the company was ditching its historically asset-light business model for a capital-intensive strategy that could hammer returns.

Meta was "throwing away its one saving grace," he wrote, cautioning that return on invested capital could decline as AI spending accelerates.

Oracle and the Cloud Debt Pile

Burry isn't just bearish on Nvidia. He also revealed he owns put options and has shorted Oracle Corp. (ORCL), citing the company's cloud computing expansion and rising debt load. Oracle shares have fallen roughly 40% from their September peak, vindicating his position so far.

The Power Problem Nobody's Solving

In a separate post, Burry urged President Donald Trump and Vice President JD Vance to fast-track a $1 trillion nuclear power and grid expansion to keep up with AI-driven electricity demand. He warned that energy shortages could choke off innovation and economic growth.

Futurum Group CEO Daniel Newman echoed the concern, saying that regulatory delays around power infrastructure represent the biggest threat to sustaining the AI boom. You can build all the data centers you want, but if there's no juice to run them, the party's over.

Burry's bet is clear: the AI infrastructure spending spree has gotten ahead of itself, and Nvidia is the most exposed name when reality catches up.