Internet Abuzz with Michael Burry’s Critique of Nvidia and AI
Investor Michael Burry has once again captured the internet’s attention with his critical stance on Nvidia and artificial intelligence (AI) companies. His recent comments on social media platform X have drawn widespread discussion, particularly following a notable downturn in the stock market.
Michael Burry’s Background
Known for his pivotal role in predicting the collapse of the housing market in the mid-2000s, Burry gained fame through the book and film adaptation “The Big Short.” His insights have earned him a reputation for forecasting economic downturns. On X, he uses the handle “Cassandra,” referencing the mythological figure known for delivering true prophecies that go unheeded.
Recent Events and Critique of Nvidia
After a two-year hiatus from social media, Burry returned in late October 2023 to express concerns about a rapidly inflating bubble in AI stocks. His hedge fund, Scion Asset Management, revealed it was holding bearish put options on Nvidia and Palantir, valued at a combined $1.1 billion by the end of September.
- Burry’s critique included questioning Nvidia’s chip longevity.
- He criticized the company’s partnerships and stock dilution practices.
Following Nvidia’s third-quarter earnings report, which exceeded expectations, shares climbed over 5%. However, Burry’s warnings did not go unnoticed, prompting a mixed reaction from market participants.
Stock Market Reactions
On Thursday, Nvidia’s stock opened positively but ended the day with a 3% decline. It further fell by 1% on Friday. Nvidia, the world’s most valuable public company with a market capitalization exceeding $4 trillion, significantly impacted the stock market’s performance.
- The S&P 500 closed 1.6% lower after losing a 1.9% gain.
- The Nasdaq Composite also experienced a drop, closing down 2.2% after starting the day 2.6% higher.
Market Sentiment Towards Burry
Burry’s return has prompted varied responses. While some deride his bearish outlook, others commend his foresight. Supporters note that Burry’s positions on Nvidia and Palantir seem prescient, with the latter’s stock dropping 25% since the earnings report on November 3, 2023.
Broader Economic Concerns
The stock downturn cannot be solely attributed to Burry’s actions. Broader economic indicators, such as a rise in U.S. unemployment to 4.4% in September, have also contributed to investor anxiety. Analysts have flagged concerning trends regarding Nvidia’s inventory and deferred revenues, indicating potential slowdowns in growth.
Looking Ahead
Burry has not yet commented on the recent backlash over his critiques of AI companies. However, his social media bio hints at future insights, stating: “‘Unchained’ coming maybe sooner than November 25th.” As the market evolves, investors and followers keenly anticipate his next move.
