Nvidia is fighting back after investor Michael Burry of “The Big Short” fame took aim at the company.
A memo Nvidia sent to Wall Street analysts, a copy of which was obtained by Business Insider, cited a series of criticisms and allegations made against the company in recent days, and directly named Berry. Specifically, he cited Barry’s X post from last week, which claimed that Nvidia’s stock-based compensation has eroded shareholder value and “reduced owner profits by 50%.”
The memo directly responds to Mr. Berry’s claims:
“NVIDIA has repurchased $91 billion of stock since 2018, instead of $112.5 billion. Mr. Burley appears to have incorrectly included the RSU tax. Employee stock grants should not be confused with the performance of the repurchase program. NVIDIA’s employee compensation is consistent with that of its peers. The fact that employees have benefited from stock price appreciation does not indicate that the original stock grant was excessive at the time of issuance.”
Burley has recently gained attention online for going after AI giants and expressing skepticism about the sustainability of the AI boom. He recently closed his hedge fund, Scion Asset Management, to outside funding and launched a newsletter.
He continued his criticism of NVIDIA in his first blog post on the new Substack Cassandra Unchained, which launched on Sunday.
In a post on X on Monday, Barry acknowledged that Nvidia pushed back on his claims in a note to analysts, adding, “I stand by my analysis. Obviously a full analysis doesn’t fit in a tweet. I’ll publish it on my timeline.”
The NVIDIA memo, previously reported by Barron’s, also notes several other claims made recently about the AI boom, including comparisons to “historic accounting fraud” at Enron, WorldCom, Lucent and others.
“NVIDIA’s underlying business is financially sound, our reporting is complete and transparent, and we value our reputation for integrity, so NVIDIA does not resemble past accounting fraud,” the memo said.
In the memo, Nvidia also responded to criticisms about circular loans between AI companies.
“First, Nvidia’s strategic investments represent a small portion of Nvidia’s revenues and an even smaller share of the approximately $1 trillion raised annually across global private capital markets,” the memo states, adding that “the companies in Nvidia’s strategic investment portfolio derive their revenues primarily from third-party customers rather than from Nvidia.”
Nvidia declined to comment.
Stock market AI trading has stumbled in recent weeks, with declines in the most popular momentum stocks driven by investor concerns about valuations, cyclical trading and concerns about depreciation of high-end GPUs like the ones NVIDIA makes to train AI models.
