Nvidia says it isn't using 'circular financing' schemes. 2 famous short sellers disagree.

Core Viewpoint - Nvidia has issued a memo to refute claims of engaging in vendor financing, a practice that could inflate revenue, amidst skepticism from notable short sellers like Jim Chanos and Michael Burry [1][2][4]. Group 1: Nvidia's Response - Nvidia wrote a seven-page document addressing allegations of a "circular financing scheme" that purportedly inflates sales by investing in its customers [2]. - The company asserts that its business model is economically sound and emphasizes its commitment to transparency and integrity [6]. - Nvidia distinguishes itself from historical accounting frauds, stating that it does not rely on vendor financing arrangements to grow revenue, as its customers typically pay within 53 days after purchasing chips [7]. Group 2: Comparisons to Historical Cases - The memo draws parallels between Nvidia and past accounting scandals involving Enron and Lucent, with the latter known for investing in loss-making telecom customers [3]. - Chanos believes the comparison to Lucent is valid, suggesting Nvidia is investing in money-losing companies to secure chip orders [4]. - Burry has raised concerns about Nvidia's revenue recognition practices, labeling them as "suspicious" due to the company's investments in its customers [8]. Group 3: Nvidia's Investments - Nvidia has made significant investments in various AI companies, including OpenAI, xAI, CoreWeave, and Nebius, which has raised concerns among investors [5].