Famed investor Michael Burry — popularly known for predicting the 2008 financial crisis and portrayed by Christian Bale in The Big Short — has launched an increasingly forceful campaign against Nvidia, positioning himself as one of the loudest critics of the ongoing AI boom.

While many analysts have cautioned about overheating in the artificial intelligence sector, Burry’s warnings stand apart. Now operating without the regulatory constraints that previously limited what he could publicly say, he is not only betting against companies driving the AI revolution but actively rallying his rapidly expanding audience to question the foundations of their growth.

At the center of Burry’s argument is Nvidia — the most valuable company of the AI era and the engine powering much of the industry’s explosive expansion. The question gripping markets now is whether Burry’s influence, credibility, and unfiltered messaging can undermine confidence in Nvidia and, by extension, key players such as OpenAI.

A Deepening Public Offensive
In recent weeks, Burry has sharply escalated his criticism. He publicly exchanged barbs with Palantir CEO Alex Karp after filings revealed that Burry held more than $1 billion in bearish put options against Nvidia and Palantir combined. Karp dismissed the strategy as “batshit crazy,” a remark Burry quickly countered by accusing the CEO of misunderstanding basic SEC filings.

The dispute highlights a broader ideological battle on Wall Street: whether AI represents a transformational wave worth unprecedented valuations, or whether markets have entered a speculative frenzy similar to past technology manias.

Burry’s Claims
Burry has accused Nvidia of using stock-based compensation practices that he says have cost shareholders more than $112 billion, cutting “owner’s earnings by half.” He also alleges that companies purchasing Nvidia hardware are overstating the useful lifespan of GPUs — a move that delays depreciation and masks the true cost of the AI buildout.

According to Burry, much of the demand fueling Nvidia’s meteoric rise may be artificially inflated by circular financing where AI firms are effectively funded by the very entities promoting the boom.

Nvidia Pushes Back
The criticism has not gone unnoticed. Despite delivering yet another blowout earnings report, Nvidia released a seven-page memo to analysts disputing Burry’s calculations. The company argued that he incorrectly factored in RSU-related taxes and stated that actual buybacks amount to $91 billion, not $112.5 billion. Nvidia emphasized that its compensation structure aligns with industry standards and dismissed any comparison to notorious corporate frauds.

Burry replied that his analogy was not to Enron, but to Cisco in the late 1990s — a company that aggressively expanded infrastructure ahead of real demand, only to see its valuation crumble by 75% when reality caught up.

A Growing Following — and Growing Influence
Burry’s warnings come at a moment when Nvidia’s market value sits around $4.5 trillion, having risen twelvefold since early 2023 — an ascent faster than any previously recorded in U.S. market history.

Although Burry achieved global recognition for correctly predicting the housing collapse, his record since then has been mixed. He missed the peak of GameStop’s meme-stock surge, lost heavily betting against Tesla, and saw investors exit his fund after long periods of underperformance. Critics often refer to him as a “permabear.”

Earlier this month, Burry deregistered Scion Asset Management with the SEC, claiming regulatory restrictions were preventing him from speaking openly. Days later, he launched a Substack newsletter titled Cassandra Unchained, which he says will serve as his unrestricted platform for analyzing markets, bubbles, and historical patterns. Within a week, more than 90,000 readers subscribed.

Could Burry Trigger the Very Crisis He Predicts?
Market historians warn that a credible critic with a large platform can accelerate corporate collapses simply by shifting sentiment. Jim Chanos’ scrutiny of Enron and David Einhorn’s dissection of Lehman Brothers both helped hasten losses of confidence that proved fatal.

If enough investors accept Burry’s view that AI companies are overbuilding infrastructure with shaky demand, selling pressure alone could begin to validate his thesis — creating a self-reinforcing cycle.

Some signs suggest Burry’s criticisms are denting confidence, though Nvidia’s strong performance over much of the year complicates that narrative.
What remains clear is that Nvidia, now the defining company of the AI era, has more at stake than any other firm. Burry, on the other hand, risks only his reputation — and now possesses a powerful megaphone he seems determined to use.

Whether he is a prophetic voice warning of an inevitable correction or a catalyst capable of triggering the downturn himself remains one of the most consequential questions facing the markets today.

Source: Techcrunch