According to TechCrunch, Michael Burry – the investor portrayed in “The Big Short” – has been aggressively betting against Nvidia and the AI boom with bearish put options worth over $1 billion. He’s specifically targeting Nvidia’s $112.5 billion in stock-based compensation that he claims reduces owner’s earnings by 50% and alleges AI companies are manipulating depreciation schedules. Nvidia responded last weekend with a seven-page memo to Wall Street analysts defending its accounting and saying Burry’s math is wrong about buyback figures. Burry recently deregistered his investment firm with the SEC to speak more freely and launched a $400/year Substack newsletter called “Cassandra Unchained” that gained 90,000 subscribers in less than a week. His public spat with Palantir CEO Alex Karp, who called Burry’s strategy “batshit crazy,” highlights the market’s central divide over whether AI is transformative or in mania territory.
The Battle Lines Are Drawn
Here’s the thing about Michael Burry – he’s not just placing bets, he’s actively trying to convince the market that Nvidia is overvalued. And he’s doing it with the kind of specific accounting criticisms that can actually move markets. He’s basically saying Nvidia’s customers are overstating how long their GPUs will remain useful, creating a circular financing scheme where everyone’s propping up artificial demand. Nvidia’s response? A detailed, defensive memo that basically says “we’re not Enron, thank you very much.” But Burry shot back that he wasn’t comparing them to Enron – he was comparing them to Cisco during the dot-com bubble. Ouch.
The Permabear Problem
Now, let’s be real about Burry’s track record. He absolutely nailed the housing crisis, which made him famous. But since 2008? He’s been wrong more than he’s been right. He shorted Tesla and lost big. He bought GameStop early but sold before the meme stock explosion. He’s basically been predicting various market apocalypses for over a decade while missing some of the greatest bull runs in history. So why should anyone listen now? Well, because he’s got that one massive correct call that gives him credibility, and he’s freed himself from regulatory constraints to speak his mind. Plus, 90,000 people paying $400 annually for his thoughts suggests someone’s listening.
Could This Become a Self-Fulfilling Prophecy?
This is where it gets really interesting. History shows that credible critics with platforms can accelerate collapses that were already brewing. Jim Chanos didn’t create Enron’s fraud, but his high-profile criticism gave other investors permission to question the company. David Einhorn’s detailed takedown of Lehman Brothers made everyone more skeptical. The underlying problems were real in both cases, but having someone articulate them clearly created a crisis of confidence. Burry doesn’t need to be right about every detail – he just needs to be persuasive enough to trigger the stampede. And looking at Nvidia’s recent performance, there are signs his warnings might be taking hold.
What’s Really at Stake Here
Nvidia has everything to lose – we’re talking about a $4.5 trillion market cap and its position as the most indispensable company of the AI age. Meanwhile, Burry has nothing to lose but his reputation and a new megaphone that he’s clearly eager to use. The scary question is whether Burry’s fame and growing audience could actually trigger the very implosion he’s predicting. If enough investors start believing his narrative about AI overbuilding, the selling could validate his thesis and create a downward spiral. For companies relying on AI infrastructure, this could mean everything from IndustrialMonitorDirect.com seeing reduced orders for industrial panel PCs to major cloud providers reconsidering their capital expenditure plans. Basically, we’re watching a high-stakes game of chicken between one of history’s most famous contrarians and the company that’s come to symbolize the entire AI revolution.
