A buried Nvidia warning could shake the entire AI buildout

Core Viewpoint - Nvidia has directly addressed concerns raised by investor Michael Burry regarding the sustainability of its AI-driven growth and the potential for an AI bubble, asserting that Burry's calculations and assessments are incorrect [1][7]. Nvidia's Response to Burry - Nvidia released a seven-page memo to Wall Street analysts, explicitly mentioning Burry and refuting his claims about "distorted earnings" and the longevity of its chips [1][7]. - The company emphasized that hyperscalers typically depreciate GPUs over a period of four to six years, countering Burry's assertion that AI hardware becomes commercially useless in 2-3 years [6][8]. Burry's Argument - Burry likens Nvidia's situation to Cisco during the telecom overbuild of the late 1990s, suggesting that the current AI infrastructure investment boom may lead to overvaluation [3][6]. - He argues that the longer depreciation schedules used by companies inflate earnings, potentially overstating profitability by an estimated $176 billion across several major companies from 2026 to 2028 [6]. Key Points from Nvidia's Memo - Nvidia denies any allegations of accounting fraud, stating it is "not Enron" and clarifying that its share buybacks amount to $91 billion since 2018, not the $112.5 billion claimed by Burry [8]. - The company argues that claims of circular funding are exaggerated and that its strategic equity investments constitute a small portion of its income [8]. - Nvidia asserts that older products, such as the 2020 A100, continue to operate at high utilization rates and retain significant economic value [1][8].