Michael Burry, the investor famous for predicting the 2008 housing crash and capitalizing on it, is now going after AI stocks. Burry has previously made several unsuccessful bets against AI stocks and failed to repeat his original success. However, his recent actions seem more aggressive, and Wall Street is all ears.
That’s because, unlike last time, most investors are now doubting whether this AI rally can keep dragging on. Burry does not think so, and he launched a very public and scathing critique of Nvidia (NVDA) alongside other AI beneficiaries like Palantir (PLTR). And it seems like he has his money where his mouth is, with Scion Asset Management buying over $1 billion in put options on Nvidia and Palantir before he closed the fund to outside investors.
The magnitude of this bet has elicited a response from Nvidia itself.
Nvidia released a secret seven-page memo to Wall Street analysts directly addressing Burry’s allegations and pushing back on fraud accusations. In response, Burry clarified his position on Substack, saying, “I am not claiming Nvidia is Enron. It is clearly Cisco.”
He dismissed Nvidia’s defense as containing “one straw man after another” and said the memo “almost reads like a hoax.”
His argument is that Nvidia is facing a multitude of issues in the future. Depreciation comes first, as he claims AI hardware becomes commercially useless in two to three years. Cloud platforms are depreciating these assets over five to six years, which he believes is being used to artificially boost margins. Plus, he alleges Nvidia’s stock compensation has cost shareholders $112.5 billion, “reducing owner’s earnings by 50%.”
He compares the current AI boom to Cisco’s role in the dot-com bubble, when telecom companies invested billions in fiber optic infrastructure based on overly optimistic projections about internet traffic. This time, he believes the same mistake is being repeated with Nvidia and GPUs.
Burry believes so. He claims that Big Tech is understating depreciation and that the problem goes beyond just Nvidia. Per Burry, between 2026 and 2028, Oracle (ORCL) could be overstating its earnings by 26%, Meta (META) by 20%, and Microsoft (MSFT) / Amazon (AMZN) / Alphabet (GOOG) (GOOGL) by ~$176 billion in unrecognized capital decay.
