Nvidia, now valued near $4.5 trillion after briefly touching a historic $5 trillion, has launched an assertive campaign to counter growing skepticism surrounding its soaring market capitalization. The company distributed a detailed memo to sell-side analysts last week, addressing a wave of criticism circulating on social media, investor forums, and financial newsletters.
Much of the pushback stems from commentary by Michael Burry, famed for predicting the 2008 housing collapse and recently vocal about perceived warning signs in Nvidia’s financial structure. Burry’s renewed criticism, published through his Substack newsletter, has reverberated across markets given his track record and influence among institutional investors.
The memo—reviewed by analysts and later published in full by Bernstein—responds directly to claims that Nvidia’s inventory levels are overstated and that customers may be slow to pay. These concerns originated from a separate Substack post that used AI-driven interpretations of Nvidia’s disclosures, suggesting financial red flags. Nvidia rejected those findings, calling them “misinterpretations of publicly available data.”
Company Rebuts Fraud Comparisons
In an unusually direct tone, Nvidia’s memo also pushed back against comparisons to historical corporate scandals, including WorldCom, Lucent, and Enron. The company stressed that its accounting practices align with regulatory requirements, emphasizing the transparency of its filings.
However, the memo did acknowledge specific challenges tied to its newest Blackwell-series AI chips. The model’s complexity has led to lower gross margins and higher warranty costs, a shift Nvidia attributed to early-generation launch effects rather than structural weaknesses.
Key clarifications highlighted in Nvidia’s memo included:
- Inventory fluctuations reflect rapid product cycles, not unsold stock.
- Customer payment schedules remain within historical ranges.
- Margin pressure on Blackwell chips is expected to ease as production scales.
- Comparisons to past accounting frauds lack factual basis.
Nvidia declined to comment publicly on the memo beyond what was distributed to analysts.
Market Pressure and Public Response
Bernstein released the memo just one day after Nvidia’s shares slipped following a report by The Information. The publication noted that Meta Platforms was holding discussions with Google to adopt Google’s competing AI accelerators—a move that could reduce Meta’s reliance on Nvidia hardware.
Nvidia quickly responded on X, praising Google’s progress while insisting its own chips remain “a generation ahead.” The defensive tone sparked debate among researchers and investors, including DeepMind’s Susan Zhang, who questioned why the world’s most valuable semiconductor company felt compelled to respond publicly to a key customer.
As competitive pressure intensifies and scrutiny from influential critics deepens, Nvidia’s decision to defend itself so aggressively highlights the stakes of maintaining leadership in the accelerating AI hardware race.
