Michael Burry says Nvidia is pushing the idea that building graphics chips that consume more and more power is the best path to advancing AI — and the result could be the US losing the AI race to China.
“Exactly and sadly,” Burry wrote on X late Saturday, responding to another user’s comment that called Nvidia the “gangster of the AI neighborhood” as it has “shut down any narrative that even hints at reducing GPU demand.”
In another post over the weekend, Burry shared a chart showing China has more than double America’s electric generation capacity, and is expanding its energy infrastructure at a much faster rate.
Nvidia has framed AI innovation as “just figuring out how to power and to cool bigger, hotter silicon,” Burry said. But China’s huge lead in building out power sources means companies in the US are “plowing capital into a race it is structurally positioned to lose.”
Burry said the US needs to shift its focus from developing more and more “power hungry” chips toward advancing “AI-tuned ASICs” — application-specific integrated circuits that are designed to do a particular task quickly and efficiently.
But he said Nvidia has a “death grip on development” thanks to its deals with many key players in the AI industry.
Nvidia did not immediately reply to a request for comment from Business Insider about Burry’s posts.
Nvidia vs Burry
Nvidia stock has surged more than 12-fold since the start of 2023, making it the world’s most valuable public company, with a market capitalization of $4.4 trillion.
The chipmaker raked in about $148 billion of revenue and $77 billion of net income in the first nine months of this year. “Blackwell sales are off the charts, and cloud GPUs are sold out,” Nvidia CEO Jensen Huang said in the third-quarter earnings release.
Burry, whose contrarian bet against the US housing bubble was chronicled in the book and movie “The Big Short,” recently pivoted from running a hedge fund to writing on Substack.
He has made the case to his readers that Nvidia and other AI companies are inflating a historic tech bubble. He has said that Nvidia’s customers have exaggerated the lifespan of its chips to drag out depreciation and boost short-term earnings.
Burry has also called out the “give-and-take” deals between Nvidia and chip buyers such as OpenAI and Oracle, and criticized Nvidia’s stock-based compensation as excessive.
Nvidia previously responded to his critiques in a memo to Wall Street analysts that was quickly leaked. Burry fired back that the document featured “one straw man after another” and he stood by his analysis.
Replying to a subsequent comment on his Substack, Burry wrote that Nvidia had “become too much of a focus.” While the company’s response did make him “think to look a little deeper,” he said it was a “relatively small short” for him.
“I believe it will fall, and is a pure play on my overall thesis, but it is not the worst out there.”
