Last week, Nvidia circulated a detailed memo to sell-side analysts, directly addressing criticisms from Michael Burry—famed for his bet against the U.S. housing market ahead of the 2008 financial crisis—and other writers on platforms such as Substack. Burry, whose views carry significant influence among investors, has in recent weeks intensified scrutiny of Nvidia, questioning its growth prospects and financial health.
The memo, obtained by Reuters and published in full by research firm Bernstein on Wednesday, tackles a recent Substack essay that claimed Nvidia was struggling with inventory accumulation and customer payment issues based on AI analysis of public filings. Nvidia countered the claims with extensive references to its publicly available disclosures, arguing that comparisons to historical accounting scandals like WorldCom, Lucent, or Enron were inappropriate.
However, Nvidia acknowledged one operational challenge: its new Blackwell chips have lower gross margins and higher warranty costs compared with previous models, a result of their increased technical complexity.
The memo’s release followed a dip in Nvidia shares, triggered by a report from tech publication The Information that Meta Platforms is in talks with Alphabet’s Google to use Google’s AI chips, which compete with Nvidia’s semiconductors. Nvidia responded on X, stating it is “delighted by Google’s success” but reaffirming that its chips remain “a generation ahead” of rivals.
The public defense on social media drew criticism from some observers. Susan Zhang, a researcher at Google’s DeepMind, wrote on X, “Surely someone at Nvidia sees how bad this looks ... right?” The comment highlights the unusual step of a major tech company publicly debating a partner and competitor simultaneously in a social forum.
Nvidia has not responded to additional requests for comment on the memo, but the episode underscores the company’s sensitivity to investor scrutiny as it navigates high expectations for its AI-focused business.