Read Nvidia’s Response to Michael Burry’s Criticism of the AI Giant

Nvidia is pushing again after investor Michael Burry of “The Large Brief” fame took goal on the firm.

A word Nvidia despatched to a Wall Road analyst, a duplicate of which was obtained by Enterprise Insider, addresses a spate of current criticisms and claims made concerning the firm and names Burry straight. It particularly cited an X post Burry made final week that mentioned Nvidia’s stock-based compensation had damage shareholder worth, “lowering proprietor’s earnings by 50%.”

The memo supplied this direct response to Burry’s claims:

“Nvidia repurchased $91B shares since 2018, not $112.5B; Mr. Burry seems to have incorrectly included RSU taxes. Worker fairness grants shouldn’t be conflated with the efficiency of the repurchase program. Nvidia’s worker compensation is per that of friends. Staff benefiting from a rising share value doesn’t point out the unique fairness grants have been extreme on the time of issuance.”

Burry has just lately gained consideration on-line for going after the AI large and expressing skepticism about the sustainability of the AI boom. He just lately closed his hedge fund, Scion Asset Administration, to exterior money, and launched a e-newsletter.

He continued his criticism of Nvidia within the first weblog posted to his new Substack, “Cassandra Unchained,” which launched on Sunday.

In an X post on Monday, Burry acknowledged Nvidia pushing again on his arguments within the memo to analysts, including, “I stand by my evaluation. Clearly, the total evaluation doesn’t slot in a tweet. I’ll launch on my timeline.” 

The Nvidia memo, which was beforehand reported by Barron’s, additionally addressed a number of different claims just lately made concerning the AI increase, together with comparisons to “historic accounting frauds” similar to Enron, WorldCom, and Lucent.

“Nvidia doesn’t resemble historic accounting frauds as a result of Nvidia’s underlying enterprise is economically sound, our reporting is full and clear, and we care about our repute for integrity,” the memo mentioned.

Nvidia, within the memo, additionally responded to criticisms about round financing between the AI firms.

“First, Nvidia’s strategic investments signify a small share of Nvidia’s income and a good smaller share of roughly $1T raised annually throughout world non-public capital markets,” the memo mentioned, including, “The businesses in Nvidia’s strategic funding portfolio predominantly generate income from third-party prospects, not from Nvidia.”

Nvidia declined to remark.

The inventory market’s AI commerce has stumbled in current weeks, with declines in the most well-liked momentum names being pushed by buyers’ issues about valuations, round dealmaking, and worries about depreciation of high-end GPUs like those Nvidia makes to coach AI fashions.