- Michael Burry warns that NVIDIA‘s GPU residual value claims rely on discounted cash flow models, not actual secondary market data.
- Recent stability in older GPU rental rates is driven by memory and energy bottlenecks rather than long-term hardware durability.
- Burry argues the widespread use of GPU-backed debt financing mirrors the unsustainable 1968 computer leasing model.
- The investor has repositioned his portfolio, covering short positions in major tech stocks and replacing them with put options.
Famed “The Big Short” investor Michael Burry argues that temporary hardware shortages are masking rapid GPU depreciation and creating structural risks across tech and private credit sectors. In his Substack newsletter, Burry highlights what he views as significant accounting flaws in Nvidia Corp.‘s claims about residual GPU values.
He contends that Nvidia’s recent investor presentation relied on an eight-year discounted cash flow model, creating an “apples-to-oranges” illusion against standard accelerated depreciation schedules. Burry attributes recent rental rate stability for older chips like the A100 to acute supply-chain bottlenecks rather than hardware durability. “A chip earning more than it costs is a sign of scarcity due to memory and power shortages, not GPU die shortages and not durability,” he writes.
Burry draws a direct parallel to the 1968 computer leasing crisis, where third-party lessors collapsed after IBM launched the System/370. He warns that the current wave of GPU buildouts financed through asset-backed loans could trigger similar industry-wide insolvencies if rental yields compress. As a signal of his conviction, Burry recently covered his short common-stock positions in firms like Nvidia and CoreWeave, replacing them with put options.
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