Michael Burry urges investors to sell Nvidia shares

In a Substack post published after reports that Nvidia’s board was considering ousting Huang, Burry argued that the CEO had built the relationships and financing arrangements that helped drive the company’s expansion in artificial intelligence. Burry has been publicly betting against Nvidia for months.

He cited Nvidia’s large investments in AI stocks and the use of special vehicles and hidden debt to help customers buy its chips, saying the arrangements created “tremendous leverage in the system.” Burry also claimed Huang pressured customers to purchase chips before they needed them by warning that future allocations could be reduced.

Without Huang, Burry wrote, cash could stop flowing and investments could dry up or be written off. Customers might slow deals, renegotiate terms or switch suppliers without concern about offending the chip chief. Nvidia’s business would not disappear, he said, but its growth could slow and margins could fall. He described the financing and trading arrangements as a “Byzantine web” that would take time to unwind, and urged Nvidia bulls to “get out.”

Nvidia stock plunged at the start of Thursday’s trading and was down nearly 35% from its peak of $243 per share in early October. Other analysts had also turned cautious. Bernstein Research’s Stacy Rasgon cut the stock to “Market Perform” and halved his price target to $200 before Huang’s departure. He cited potential bad press and regulatory scrutiny, questioned whether a successor could match Huang’s vision and raised the risk of employees leaving.

Oppenheimer’s Rick Schafer downgraded Nvidia to “Perform” on Wednesday and removed his price target. He said Huang had been critical to Nvidia’s success as the “face of AI,” and warned that his exit could lead to a “brain drain” and a lingering overhang on the shares.