Michael Burry has doubled down on his criticism of Nvidia and other AI giants, revealing that he’s betting on both Nvidia and Palantir.
In a new Substack post on Tuesday, the investor known as “The Big Short” criticized Nvidia’s recent memo to Wall Street analysts, saying it addressed claims he did not make.
In a post titled “Unicorns and Cockroaches: A Blessed Scam,” Burley wrote that he couldn’t believe NVIDIA’s response was coming from the world’s most valuable publicly traded company. He said the document contained “one straw man after another” and the memo “almost sounds like a hoax.”
The market veteran, who recently closed his hedge fund to outside funding to focus on writing, said he never suggested that Nvidia was prolonging the depreciation of property, plant and equipment (PP&E) because it was primarily a chip designer and not a manufacturer with minimal capital expenditures.
“No one cares about NVIDIA’s own depreciation,” he said. “One straw doll was burnt.”
Burley also denied NVIDIA’s claims that previous generation chips were still in use, saying he was concerned that new chips could become functionally obsolete between 2026 and 2028.
“I’m looking forward to it because I see issues that are relevant to investors today,” he said. “The second straw doll was burnt.”
Burry added that NVIDIA’s rebuttal to him was “dishonest on its face and disappointing.”
In his latest post, he revealed his bets on the chipmaker and another AI darling, saying, “I continue to own shares in Palantir and Nvidia, but I’ll discuss both at another time.”
Nvidia did not immediately respond to a request for comment on Burry’s latest post.
Depreciation questions
One of Burry’s main concerns is AI companies’ depreciation accounting, or how fast they predict the value of an asset will fall and how much it will be worth at the end of its useful life.
Companies can increase their short-term profits and the stated value of their assets by spreading their costs over five to six years instead of three. But that could pave the way for hefty write-downs down the road, Barry wrote on Substack.
He also highlighted a recent interview with Microsoft CEO Satya Nadella, in which Nadella said the company delayed construction of its data centers earlier this year, wary of overbuilding its infrastructure to accommodate one generation of AI chips because the next generation would have different power and cooling requirements.
“Hyperscalers invest hundreds of billions of dollars in graphics chips that are subject to accelerated planned obsolescence and are systematically extending the useful lives of their chips and servers for depreciation purposes,” Barry wrote.
“I got drawn into something much bigger than myself,” he said, hinting that between the memo and the broader market reaction, his stock-drop comments caused a bigger reaction than he expected.
Nvidia stock has fallen 14% from its Nov. 3 high as investors grow concerned that AI companies are overspending and overvalued.
Barry rose to fame after his huge bet on the U.S. housing bubble was immortalized in the book and film “The Big Short.” Known for his dire warnings about crashes and recessions, he returned to Company X after a two-year hiatus in late October and argued that AI stocks were in a bubble.
His Scion Asset Management company disclosed for the first time on Nov. 3 that it held bearish put options on Nvidia and Palantir at the end of September. The total notional value of the bet was $1.1 billion, but Barry wrote in his latest post that the bets only cost about $10 million each.
