This Thanksgiving's real drama may be Michael Burry versus Nvidia

Core Viewpoint - Michael Burry is aggressively betting against Nvidia, claiming that the AI boom is a bubble and attempting to convince others of his bearish thesis [2][3][15]. Group 1: Burry's Allegations and Strategy - Burry holds over $1 billion in bearish put options on Nvidia and Palantir, indicating a strong belief that their stock prices will decline [3]. - He accuses Nvidia of costing shareholders $112.5 billion through stock-based compensation, which he claims reduces owners' earnings by 50% [3]. - Burry suggests that AI companies are manipulating financials by overstating the useful lives of Nvidia's GPUs, leading to inflated capital expenditures [3]. - He argues that the demand for AI products is misleading, as customers are allegedly funded through a circular financing scheme [3]. Group 2: Nvidia's Response - Nvidia has issued a seven-page memo to Wall Street analysts, countering Burry's claims and stating that his calculations are incorrect, particularly regarding stock buybacks [5]. - The company asserts that its employee compensation practices are consistent with industry peers and emphasizes that it is not comparable to Enron [5]. Group 3: Market Implications and Historical Context - Burry's warnings have gained traction, leading to speculation about whether he could influence investor sentiment and trigger a sell-off in Nvidia's stock [15][16]. - Historical examples show that prominent critics can accelerate the unraveling of companies with underlying issues, as seen with Enron and Lehman Brothers [15]. - Nvidia's market cap is currently at $4.5 trillion, having increased twelvefold since early 2023, making it the most valuable company in the world [8].