Michael Burley of “The Big Short” fame has doubled down on his bearish thesis on Nvidia, raising red flags about items in the chipmaker’s latest earnings report that mirror a pattern seen at the height of the dot-com bubble in the late 1990s. Barry noted in Thursday’s Substack newsletter that NVIDIA’s acquisition obligations jumped to $95.2 billion from $16.1 billion a year earlier. Total supply obligations, including inventory and purchase agreements, currently amount to approximately $117 billion, roughly equal to NVIDIA’s annual operating cash flow. During the company’s fiscal fourth quarter earnings call on Wednesday, Chief Financial Officer Colette Kress said inventory increased 8% quarter-over-quarter and that NVIDIA had “strategically secured inventory and production capacity that will last us beyond the next few quarters, even later than usual.” To Barry, NVIDIA’s comments suggest that the largest publicly traded company in the U.S. is committing to buying large amounts of supply before knowing exactly how strong future demand will be. This means more cash stays in inventory for longer periods of time. ‘It’s not temporary’ “What’s happening now is not temporary. It’s not an export shock. It’s not external. This is coming from within the business plan,” he wrote. “This new reality reflects a deliberate decision to lock in supply chain capacity even more than NVIDIA has done in the past.” The prominent investor compares the current situation to that of Cisco Systems at the height of the dot-com boom in the late 1990s and early 2000s. In 2000 and 2001, Cisco secured large supply commitments to support its rapid growth expectations. When corporate technology spending suddenly declined, Cisco was left with excess inventory and unusable contractual obligations. The company ultimately had to take billions of dollars in writedowns, and its stock price plummeted. “This is not business as usual. This is a risk,” Burry said of Nvidia. “In 2000 and 2001, Cisco extended purchasing agreements with suppliers to ensure that they had the capacity to meet the 50% annual growth that Cisco expected,” he said. Indeed, investors noted that Nvidia’s profit margins, now over 70%, are higher than Cisco’s at the time, which could provide some downside protection. But Burley believes those margins were pushed up by unusually strong demand and Nvidia’s ability to raise prices. “These types of margins are likely to quickly rebound as demand changes,” he wrote. Addressing concerns Still, not everyone sees this buildup as a red flag. Analysts at Rosenblatt Securities said management addressed multiple investor concerns during the quarter, including GPU capacity, competition from custom chips, power availability, memory supply and customer financing. “We see a confident management team that supports customer demand for next-generation platforms and continues to lead the evolution of the AI market,” Rosenblatt analysts said in a note to clients. The Wall Street firm on Thursday raised its 12-month price target for Nvidia to $300 from $245, implying an upside of more than 50% over the next 12 months. Nvidia was down about 4% in early trading Thursday, near session lows. After the stock price soared from 2023 to 2025 after the introduction of ChatGPT, the rate of increase as of 2026 is less than 1%.
