Nvidia dispatched a densely worded manifesto to analysts firmly denying it is secretly lending money to its own customers so they can buy more Nvidia chips. Two of the most celebrated short sellers on the planet promptly replied, in essence, “That’s exactly what someone doing that thing would say.”
The drama began when a relatively obscure Substack newsletter accused the $5 trillion-valued Nvidia of running a “circular financing scheme” reminiscent of Enron’s off-balance-sheet wizardry and Lucent’s generous habit of funding broke telecom startups so they could, in turn, purchase mountains of Lucent gear that promptly gathered dust when the checks bounced.
Investors spent Tuesday oscillating between “everything is fine and everything is definitely Enron 2.0, producing the dignified spectacle of a $5 trillion company publishing what amounted to a seven-page PowerPoint captioned “Please stop comparing us to infamous accounting disasters, it’s hurting our feelings.”
Meanwhile, Nvidia shares performed their now-familiar rollercoaster routine—plunge on rumor, recover on denial, repeat—proving once again that nothing calms a market like a strongly worded memo.
Nvidia opened its defense with the calm assurance of a teenager caught with cookie crumbs on his face insisting he has never even heard of cookies.
The company highlighted that actual vendor financing involves customers repaying suppliers over several leisurely years, whereas Nvidia’s clients settle invoices in a brisk 53 days—roughly the time it takes Amazon to deliver a single sock.
It then noted its investments in customers such as OpenAI, Elon Musk’s xAI, CoreWeave, and Nebius are perfectly normal strategic stakes in the AI ecosystem and not at all a clever way to juice chip orders.
Jim Chanos told Yahoo Finance that Nvidia is indeed “putting money into money-losing companies in order for those companies to order their chips.” He delivered with the weary tone of someone watching history rhyme in real time.
Michael Burry posted that Nvidia exhibits “suspicious revenue recognition,” which is Wall Street speak for “this smells like 1999 all over again.”
Nvidia countered that its underlying business is “economically sound,” its reporting is “complete and transparent,” and it cares deeply about its “reputation for integrity”—a sentence that has never before been followed by a stock price dip, yet here we are.
Chanos further warned that some Nvidia customers are funding GPU shopping sprees with off-balance-sheet debt, the financial equivalent of hiding the credit-card bill under the mattress and hoping Mom never checks.
He called the combination of arcane credit structures and money-losing AI startups “the real Achilles heel to the AI tech market,” which is analyst code for “this could end with a very expensive yard sale of flaming servers.”
Burry went full Nostradamus in his new Substack, declaring the industry is witnessing “catastrophically overbuilt supply and nowhere near enough demand,” a polite way of saying there are enough data centers under construction to train an AI to beat Garry Kasparov at chess 47 million times over while the rest of us are still just asking it to write slightly better spam.
Nvidia insists demand remains “off the charts” and it is “a generation ahead” of rivals—an assertion briefly tested when Google’s latest AI chip news sent the stock into a brief existential crisis before buyers remembered that panic-selling Nvidia is a lifestyle, not a strategy.
Chanos closed with the gentle reminder that if the world suddenly decides it doesn’t need quite so many glowing refrigerator-sized GPUs in 2027, “orders could be canceled,” which would be unfortunate for a company currently valued as if cancellation is a myth.
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