Burry remains bearish on Nvidia after its 10% slide

In a Tuesday Substack post, Burry said he was “a bit shocked at how the market has turned on the company.” Nvidia closed at about $169 a share on Tuesday, down more than 30% from its October 6 record of around $243. The decline has erased more than $1.7 trillion from its market capitalization in just over a month, exceeding Meta’s entire market value. The slide has also reflected concerns about heavy AI spending and possible tighter regulation after Democrats won control of the House and Senate last week.

Huang told employees in a Sunday email that he had had an affair, following reports of a close relationship with a suspected Chinese spy. Burry said he doubted the controversy would hurt Nvidia’s business economics substantially. But he warned it could accelerate the erosion of the company’s competitive advantage over the next five years and prompt the US government to restrict Nvidia chip sales to China or investigate the company’s practices. He described Nvidia’s investments in and demands of other AI companies as “mafia-like behavior,” adding that enforcement agencies would have grounds to act if they “stop ignoring and start investigating.”

Burry said he was not “tempted” to buy and hold Nvidia shares, though he could imagine the market soon viewing them as “a heck of a trade.” He also warned that Nvidia’s dominant position would “battle mightily” against valuation multiples, still elevated by sky-high margins, getting too low. The company did not immediately respond to Business Insider’s request for comment. Its shares rose about 4% in premarket trading on Wednesday.

Burry has been betting against Nvidia for months. In October, he said he had shorted the VanEck Semiconductor ETF, in which Nvidia accounted for nearly 20%. In September, he said he had replaced an outright Nvidia short with bearish put options struck in the mid-$100s and expiring the following September. He has called Nvidia a direct way to bet against the AI boom, arguing that it depends on hyperscaler spending, and has cited accounting practices, circular financing, hidden debt, overinvestment and stock-based compensation as risks. Burry is known for his bet against the mid-2000s housing bubble, chronicled in “The Big Short.” About a year ago, he shifted from running a hedge fund to writing about his personal investments.