Nvidia is responding to criticism from investor Michael Burry, known for his role in “The Big Short.” Burry has raised eyebrows with his tweets claiming that Nvidia’s stock compensation practices have significantly harmed shareholder value, stating it “reduces owner’s earnings by 50%.”
In a memo intended for Wall Street analysts, Nvidia directly addressed Burry’s claims. They clarified that they have repurchased $91 billion worth of shares since 2018, not the $112.5 billion Burry suggested. Nvidia emphasized that employees’ stock compensation isn’t the same as the value of their share buyback program, stating, “Employee equity grants should not be conflated with the performance of the repurchase program.”
Burry has grown increasingly vocal about his skepticism regarding the AI industry’s sustainability. After recently closing his hedge fund, Scion Asset Management, to outside investors, he launched a newsletter titled “Cassandra Unchained.” In his first blog post, he reiterated his concerns about Nvidia amidst a wider critique of the AI sector.
In a follow-up tweet, he acknowledged Nvidia’s response but reiterated his stance, mentioning that the full analysis is too complex for a tweet. He plans to elaborate later.
Nvidia’s memo also tackled comparisons to historical accounting frauds, like Enron and WorldCom. They asserted that their business model is sound, their reporting is transparent, and they value their integrity.
Additionally, Nvidia pushed back against claims of circular financing in the AI industry by stating that their strategic investments account for a small fraction of their revenue. They clarified that most of their investment partners generate income from third-party customers instead of relying on Nvidia directly.
As the excitement around AI stocks has cooled in recent weeks, many investors are becoming wary. There’s growing concern about inflated valuations and the potential depreciation of high-end GPUs, which are crucial for training AI models.
Recent data from market analysis shows that Nvidia’s stock has dropped over 15% in the last month alone, reflecting these investor concerns. In the fast-moving world of tech, fluctuations like these can have significant implications for companies involved in the AI boom.
For more information, you can check out the original details here.
In the end, the discussions between Burry and Nvidia highlight the ongoing tensions in the tech world, especially as AI continues to evolve. Will these debates shape the future of AI investments? Only time will tell.
Source link
nvidia,memo,criticism,name burry,company,michael burry,business insider,claim,revenue,x post burry,shareholder value,response,strategic investment,historical accounting fraud,small share
