Michael Burry, the investor known for predicting the 2008 mortgage crisis, has escalated his criticisms of Nvidia after identifying what he describes as evidence of circular financing in the chipmaker’s most recent quarterly filing (10‑Q), according to Benzinga. Burry argues the financing structure creates material risks for investors.
The dispute centers on an SB Energy and OpenAI‑related agreement
Burry’s concern focuses on an arrangement involving Nvidia and SB Energy, an affiliate of SoftBank. The 10‑Q states that Nvidia committed $105 billion in guarantees related to the construction of an OpenAI‑leased data center in Ohio, known as the PORTS Technology Campus. The guarantees reportedly cover land acquisition, power supply, and structural construction. The PORTS campus is expected to support about 4.25 gigawatts of IT capacity and operate exclusively Nvidia AI infrastructure.
Burry characterizes these deals as forming a self‑reinforcing financing loop, suggesting they may mask risks and exaggerate apparent demand. He used a metaphor saying investors are figuratively "whistling by the graveyard."
Nvidia management rejects the allegation
Nvidia’s leadership has strongly denied the circular financing accusation. Colette Kress, Nvidia’s Chief Financial Officer, acknowledged the size of the guarantee during the latest earnings commentary but said the company views the arrangements differently than some critics do. CEO Jensen Huang also disputed the claim that these financing deals artificially inflate revenue, stressing that OpenAI will be responsible for lease payments.
Burry’s position and market reaction
Burry continues to maintain a bearish stance toward the broader AI ecosystem. Although he bought December Nvidia call options as a hedge, Benzinga reports he still holds a substantial short position. He says the mechanisms disclosed in the 10‑Q will ultimately validate his bearish thesis over time.
Market prices have remained mixed: Nvidia shares are up 22.24 percent year‑to‑date, and according to the article they closed Thursday’s trading up 8.74 percent at $227.98, with a slight post‑close correction.
Why this matters
The dispute highlights how financing structures for large technology and AI projects can affect corporate risk profiles and valuations. If Burry’s interpretation is correct, such arrangements could distort investors’ assessments of revenue and risk; if Nvidia’s interpretation is accurate, the transactions may reflect commercial risk‑sharing rather than accounting manipulation. The disagreement may draw further scrutiny from investors and potentially regulators.
(This article is not investment advice.)
