While families gather for Thanksgiving, a financial drama of epic proportions unfolds as Michael Burry – the legendary investor who predicted the 2008 housing crash – wages an aggressive campaign against Nvidia, placing a staggering $1 billion bet that the AI revolution is heading for a catastrophic collapse. This isn’t just another market prediction; it’s a high-stakes confrontation that could determine the future of artificial intelligence investing.
Why Michael Burry’s Nvidia Short Position Matters Now
Michael Burry has taken his most aggressive stance yet against the AI sector, with regulatory filings revealing he holds substantial bearish put options against both Nvidia and Palantir. This $1 billion bet represents more than just financial positioning – it’s a declaration of war against the entire AI industrial complex. Unlike traditional investors who quietly build positions, Burry has embraced his role as a public critic, using his newfound freedom from SEC regulations to amplify his warnings.
The AI Bubble Warning Signs You Can’t Ignore
Burry’s analysis points to several critical vulnerabilities in the AI boom narrative:
- •Stock-based compensation costing Nvidia shareholders $112.5 billion
- •Questionable accounting practices around equipment depreciation
- •Circular financing schemes among AI customers
- •Overstated useful lives of Nvidia GPUs
Nvidia’s Fierce Defense Against Stock Market Critics
Nvidia isn’t taking these accusations lightly. The company recently distributed a seven-page memo to Wall Street analysts countering Burry’s claims point by point. Nvidia argues that Burry’s math is fundamentally flawed, particularly regarding stock-based compensation calculations. The company maintains its practices are consistent with industry peers and vehemently denies any comparison to historical corporate failures.
| Burry’s Allegations | Nvidia’s Response |
|---|---|
| $112.5B stock compensation cost | Actual figure is $91B after RSU taxes |
| Questionable depreciation practices | Standard industry accounting methods |
| Circular financing among customers | Strong, legitimate customer demand |
| Comparison to Cisco bubble | Fundamentally different market conditions |
Short Selling History Repeating Itself?
Burry’s track record adds weight to his current warnings. His successful prediction of the housing crisis made him famous, but his post-2008 performance has been mixed. He missed the GameStop meme stock explosion and lost money shorting Tesla. However, his new Substack publication, “Cassandra Unchained,” has already attracted 90,000 subscribers in less than a week, demonstrating significant market influence.
Could This AI Bubble Trigger Widespread Market Collapse?
The most unsettling question isn’t whether Burry is right, but whether his growing platform could become a self-fulfilling prophecy. History shows that credible critics can accelerate market corrections – Jim Chanos with Enron and David Einhorn with Lehman Brothers demonstrated how vocal skepticism can trigger the very collapses they predict. With Nvidia’s $4.5 trillion market cap at stake, the stakes couldn’t be higher.
FAQs: Michael Burry vs Nvidia Showdown
What companies is Michael Burry targeting with his short positions?
Burry has revealed bearish put options against Nvidia and Palantir, representing over $1 billion in potential losses if these stocks continue rising.
How has Nvidia responded to Burry’s allegations?
Nvidia issued a detailed memo to analysts disputing Burry’s calculations and defending their accounting practices as industry-standard.
What is Michael Burry’s new publication?
After deregistering Scion Asset Management with the SEC, Burry launched “Cassandra Unchained” on Substack to communicate directly with followers without regulatory constraints.
How does this compare to previous market bubbles?
Burry compares the current AI boom to Cisco in the late 1990s, where overbuilt infrastructure led to a 75% stock collapse when demand failed to materialize.
This high-stakes confrontation between one of finance’s most controversial figures and the world’s most valuable company represents more than just a market disagreement – it’s a battle for the narrative surrounding artificial intelligence’s future. Whether Burry’s warnings prove prescient or premature, his ability to influence market sentiment could determine whether the AI revolution continues its meteoric rise or faces the reckoning he predicts.