Nvidia namechecks Michael Burry in secret memo pushing back on AI bubble allegations

Core Viewpoint - The ongoing dispute between Nvidia and investor Michael Burry highlights concerns over the sustainability of the AI investment boom, with Burry likening Nvidia's current position to that of Cisco during the late 1990s telecom bubble [1][5]. Group 1: Nvidia's Response to Criticism - Nvidia circulated a private memo to analysts addressing Burry's claims regarding stock-based compensation (SBC) and depreciation, asserting that it stands by its financial practices [2][3]. - The memo disputes Burry's assertion that customers are overstating the useful lives of Nvidia's GPUs, stating that customers typically depreciate GPUs over four to six years based on actual usage [3]. - Nvidia argues that older GPUs, such as the A100s released in 2020, maintain high utilization rates and significant economic value beyond the two to three years suggested by critics [4]. Group 2: Burry's Concerns and Comparisons - Burry warns that the current AI infrastructure investment frenzy mirrors the telecom buildout of the late 1990s, characterized by massive capital expenditures and inflated valuations [2][5]. - He emphasizes that today's hyperscalers are projected to spend nearly $3 trillion on AI infrastructure over the next three years, drawing parallels to the telecom companies' spending on fiber optics and Cisco equipment [5]. - Burry's analogy centers on the idea of overbuilt supply failing to meet demand, similar to the early 2000s when less than 5% of U.S. fiber capacity was operational [6].