Is This the Pin That Pops the AI Bubble? The Reason Why Burry and Thiel Are Bearish on Nvidia
Concerns are rising over Nvidia's accounting, cash flow conversion, and inter-company deals, leading investors like Burry and Thiel to express bearish sentiment.Summary
Despite record revenues, Nvidia's stock experienced volatility due to scrutiny over its financing model. Key concerns include a significant increase in unpaid customer bills ($33.4 billion) and a large inventory of unsold chips ($19.8 billion). Furthermore, the gap between reported profit ($19.3 billion) and actual cash flow ($14.5 billion) suggests a lower cash conversion rate (75%) compared to peers like TSMC and AMD (over 95%), raising questions about growth sustainability.
Prominent investors are taking note: Michael Burry warns of "suspicious revenue recognition" due to circular funding among AI firms (like xAI, Microsoft, OpenAI), suggesting true end-user demand is small. Burry also highlighted share dilution via buybacks and questioned the profitability of older GPUs. Peter Thiel reportedly sold all his Nvidia shares, and SoftBank also sold a large stake. Burry has bought put options betting on a significant drop.
While supporters cite strong cash flow and major orders, 45% of fund managers surveyed by Bank of America see AI as a major bubble risk. The market's focus is now on upcoming Q4 results and potential restatements, which will determine the future trajectory of the AI-driven tech era.
(Source：BeInCrypto)