Michael Burry sees trouble ahead for Nvidia. The investor who anticipated the 2008 housing collapse now warns that the artificial intelligence spending frenzy has created conditions ripe for a sharp reversal in the chipmaker’s stock. Low trading volumes. Thin hedging. And fundamentals that don’t support current prices. These signals, he argues, point to vulnerability greater than in past downturns.
Burry laid out his case in recent posts on Substack. “The conditions for an aggressive fall are as strong as they have been in the history of the stock,” he wrote. (Business Insider, May 2026). He expects the next drop could exceed previous declines of 56% in 2018, 67% in 2021 and 43% in 2025. Short sentences. Clear warnings. No hedging from the man known as the Big Short.
His analysis starts with market mechanics. Nvidia’s 50-day moving average trading volume sits at its lowest level since 1999. Hedging activity has dried up too. Put options on Nvidia cost less than comparable names, reducing the incentive for investors to protect downside. When fear subsides and volumes stay thin, any shift in sentiment can accelerate fast. Burry connects these dots to a broader view on AI infrastructure demand. He calls much of the current spending distorted by a training and benchmarking phase. One that won’t last.
But his critique runs deeper. Burry labels portions of the AI boom “fugazi.” In response to CNBC’s Jim Cramer suggesting Nvidia remained a winner despite the stock feeling heavy, Burry fired back. “There are good reasons for this Jim. It is all Fugazi. How to make tens of $billions worth of NVDA GPUs disappear from balance sheets in 8-12 byzantine steps,” he posted. (Yahoo Finance, June 2026). Complex financing arrangements, special purpose vehicles and layered debt structures allow massive GPU purchases to vanish from traditional balance sheet visibility. Billions in hardware move through channels that keep reported figures clean. Yet the economic reality lingers.
This echoes his earlier attacks. In late 2025 Burry compared Nvidia to Cisco at the peak of the dot-com bubble. “Sometimes the new company is the same company on a pivot,” he noted. Supply-side gluttony marked that era. He sees parallels now as hyperscalers and startups promise nearly $3 trillion in AI infrastructure spending over several years. Five major cloud providers plus younger ventures drive the surge. Nvidia sits at the center, selling the picks and shovels. Its name is Nvidia. The phrase became shorthand for his thesis. (Reuters, November 2025).
Nvidia pushed back. The company circulated a seven-page memo to sell-side analysts that explicitly addressed Burry’s points. It corrected figures on share repurchases, noting $91 billion since 2018 rather than the $112.5 billion Burry cited, which appeared to include restricted stock unit taxes. The memo defended accounting practices around stock-based compensation and depreciation. Burry stood firm. “I stand by my analysis. I am not claiming Nvidia is Enron. It is clearly Cisco,” he replied. (CNBC, November 2025). The exchange highlighted a core tension. One side sees transformative technology justifying lofty multiples. The other spots accounting choices and temporary demand that inflate today’s results.
Portfolio Moves Reveal Conviction
Burry has put capital behind the view. Scion Asset Management disclosed more than $1 billion in put options against Nvidia and Palantir in third-quarter 2025 filings. Roughly $188 million notional on Nvidia and far larger exposure to Palantir. He added to Nvidia put positions later, including January 2027 contracts with strikes well below current prices. Those bets require a drop of more than 40% by expiration to move in the money. Patience defines the strategy. Drawdowns can last years before the payoff arrives. (The Wall Street Journal, November 2025).
Earlier this year he flagged Nvidia’s purchase obligations. The figure jumped from $16.1 billion to $95.2 billion in one year. Non-cancellable contracts for fabrication and packaging capacity. Burry likened the surge to Cisco’s commitments at the height of the prior tech boom. Demand looks strong on paper. Yet concentrated buyers and distorted incentives create risk. A bullwhip effect could follow once the benchmarking wave crests. And Burry keeps sounding the alarm. Recent posts double down. Low volume. Dearth of hedging. Fundamentals misaligned. The setup feels familiar to him.
Market reaction has been mixed. Nvidia shares have powered higher at times despite the noise. Earnings continue to impress. Revenue growth remains robust. Yet volatility persists. Some analysts dismiss Burry as a perma-bear who has warned of trouble before without immediate collapse. Others watch closely. His track record includes prescient calls even when timing looked off. The 2008 housing bet took time to flower. So did certain equity shorts.
Recent coverage adds fresh detail. Burry highlighted how GPUs end up in data centers through structures that obscure ownership and financing. One example involved a special purpose vehicle funded by debt from Apollo Global and later packaged for insurers. The chips power models at facilities linked to major AI players. Yet neither the seller nor the end user fully reflects them on balance sheets in straightforward fashion. Legal. Opaque. Risky if utilization or resale values disappoint. (Business Insider, June 2026 update).
So what happens next? Burry doesn’t predict exact timing. He points to signs. Thin liquidity. Concentrated demand. Accounting that smooths reality. A training phase that ends. When sentiment turns, the fall could prove dramatic. History shows tech leaders can lose two-thirds of their value when the narrative cracks. Cisco did. Nvidia might face similar pressure if AI capital expenditure slows or proves less productive than hoped.
Investors face a choice. Embrace the transformation story and its trillion-dollar spending projections. Or heed Burry’s data-driven skepticism. Volumes at multi-decade lows. Hedging unusually cheap. Obligations ballooning. Billions in hardware financed through layered vehicles. These aren’t abstract concerns. They represent real pressure points in a market that has rewarded belief in endless growth.
Burry closed his hedge fund recently yet continues to publish analysis. His audience exceeds 200,000 on Substack. Reactions vary from applause to dismissal. One thing stays constant. He backs words with positions. Puts on Nvidia. Warnings repeated. A focus on what the numbers actually show rather than the hype surrounding them. The AI boom produced genuine advances. No one disputes that. The question Burry forces is whether current stock prices and spending levels reflect sustainable economics or temporary excess. His answer lands firmly on the latter. Time will test it.
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