Xin Lang Cai Jing·2026-02-26 23:59Core Viewpoint - Renowned investor Michael Burry warns that Nvidia has placed itself in a "dangerous position" by significantly increasing its procurement obligations, which could lead to "catastrophic" financial consequences if the AI boom fades [1][2]. Procurement Obligations - Nvidia's procurement obligations surged from approximately $16 billion to $95 billion within 12 months, driven by major supplier TSMC's insistence on longer-term contracts and cash payments to build capacity for Nvidia's latest chip production [1][2]. - The total supply obligations of Nvidia amount to $117 billion, nearly equal to its annual operating cash flow as of January 25 [3]. Supply Chain and Inventory Risks - Burry emphasizes that Nvidia is compelled to place non-cancelable orders without clear demand, leading to longer times to convert inventory into sales [3]. - This situation indicates a deliberate move to lock in supply chain capacity more than ever before [3]. Comparison to Cisco - Burry compares Nvidia's situation to Cisco during the internet bubble, where Cisco extended procurement commitments to support anticipated annual growth of 50% [4]. - He notes that when IT and data network spending dropped sharply, Cisco had to write down about 40% of its supply chain liabilities and inventory, resulting in a significant stock price decline [5]. Profit Margin Concerns - Nvidia's high profit margins are partly due to strong product demand granting pricing power; however, a decline in demand could lead to reduced profit margins [5]. - Unlike companies that can easily weather industry fluctuations, Nvidia's heavy supply obligations pose greater potential risks during market downturns [5].