'Big Short' Investor Michael Burry Just Torched Nvidia's Buyback Strategy—And the Math Is Uncomfortable For Shareholders

Core Insights - Michael Burry critiques Nvidia Corp.'s shareholder practices, highlighting a disconnect between earnings and shareholder benefits [1][2] - Burry's analysis reveals that Nvidia's stock-based compensation practices dilute the benefits of its share buyback program [4][6] Financial Performance - Nvidia generated $205 billion in cumulative net income and $188 billion in free cash flow from 2018 to mid-2025 [3] - The company executed $112.5 billion in share buybacks during the same period [3] Stock-Based Compensation Impact - Nvidia issued $20.5 billion in stock-based compensation, which Burry argues offsets the entire buyback effort, increasing shares outstanding by 47 million [4][5] - Annual stock-based compensation rose from $1.3 billion in 2018 to $4.7 billion in fiscal year 2025 [5] Implications for Investors - Burry's analysis suggests that the dilution from stock-based compensation reduced Nvidia's per-share earnings by approximately 50% [7] - This dilution effect means that existing shareholders own a smaller percentage of the company despite significant buybacks [7]