Michael Burry, known for predicting the 2008 housing crash, is now targeting AI stocks after unsuccessful bets. He criticized Nvidia and Palantir, with Scion Asset Management buying over $1 billion in put options on them. Nvidia responded to Burry’s allegations in a seven-page memo, sparking a debate on AI stocks’ future.

Burry claims Nvidia faces future issues like depreciation and stock compensation costs. He compares the AI boom to Cisco’s role in the dot-com bubble, warning of potential financial misstatements by AI companies. He accuses Big Tech of understating depreciation and believes the AI bubble poses significant risks to investors.

Burry alleges AI companies engage in round-tripping to inflate financials, citing examples involving Microsoft and Nvidia. Nvidia corrected Burry’s claim on stock buybacks, stating a lower cost. The company defended its depreciation practices and investments, arguing against Burry’s criticisms.

Nvidia refutes Burry’s criticisms on stock buybacks and depreciation practices. The company defends its investments and financial practices, citing actual longevity of GPUs and minimal reliance on circular financing. The debate between Burry and Nvidia highlights the uncertainties surrounding AI stocks and the potential risks for investors.

Burry argues that the extreme spending by AI companies is unsustainable, potentially leading to a reality check for NVDA investors. The timing of a potential decline in the AI bubble remains uncertain. Investors must consider the risks involved in the current market environment and the possibility of a future correction in AI stocks.

Read more at Yahoo Finance: Nvidia May Not Be Enron, But Does NVDA Stock Still Face AI Bubble Risks Here?