-
Nvidia (NVDA) invested $2B in Synopsys (SNPS) to strengthen its chip growth provide chain regardless of rising scrutiny over round financing allegations.
-
Michael Burry argues Nvidia mirrors Cisco in the course of the dot-com bubble fairly than Enron, and warns of a looming capex apocalypse.
-
Hyperscalers prolonged GPU depreciation to 4 to 6 years regardless of Nvidia’s 12 to 18 month refresh cycles and this understates sector depreciation by $176B from 2026 to 2028.
-
Some buyers get wealthy whereas others battle as a result of they by no means discovered there are two utterly completely different methods to constructing wealth. Don’t make the identical mistake, study each right here.
Nvidia (NASDAQ:NVDA) is dealing with intensifying scrutiny over allegations of round financing in its AI chip ecosystem. Critics declare the corporate engages in a self-reinforcing loop: Nvidia invests in clients like CoreWeave (NASDAQ:CRWV) and privately-held Lambda, which then purchase extra Nvidia GPUs utilizing that capital, artificially inflating gross sales. This echoes previous considerations with stock-based compensation and chip depreciation practices that increase short-term revenues.
Nvidia has rebutted these claims as misrepresentations, emphasizing there’s real demand from hyperscalers. But crucial voices are rising louder, with brief sellers warning of hidden dangers spreading a contagion.
Undeterred, Nvidia is outwardly thumbing its nostril at critics, asserting this morning a brand new $2 billion funding in chip designer Synopsys (NASDAQ:SNPS), signaling confidence — or maybe defiance — in deepening ties with its key companions.
Michael Burry, famed for appropriately calling the 2008 housing crash, has additionally pushed again on fraud labels. He insists Nvidia is not an Enron-style deception, however fairly extra carefully mirrors Cisco Techniques (NASDAQ:CSCO) in the course of the dot-com bubble days.
“I’m not claiming Nvidia is Enron,” Burry lately wrote on his Cassandra Unchained Substack. It’s clearly Cisco.” He factors to Nvidia’s position as AI’s “picks and shovels” supplier. Like Cisco’s 3,800% surge between 1995 and 2000 — which was adopted by a 78% lack of worth — Nvidia’s hype-driven progress dangers overcapacity if AI demand falters. Hyperscaler commitments for $3 trillion in information heart buildouts create “round loops.” But with out a lot end-user traction, a “capex apocalypse” looms.
Burry additional exposes how Huge Tech is artificially inflating earnings by stretching the helpful lives of the GPUs it buys from Nvidia. Hyperscalers like Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOG)(NASDAQ:GOOGL) have quietly prolonged the depreciation of the GPUs to 4 to 6 years, regardless of Nvidia’s “insane” 12- to 18-month refresh cycles — resembling Grace Blackwell in 2024 and Rubin in 2026. As a substitute of increasing lifespans, a extra lifelike estimate could be a shortened two to a few years.
