Michael Burry Says Nvidia Earnings Will Be 'Great' — So Why Is He Telling NVDA Bulls To 'Get Out'?

• Analysts expect 13% quarterly revenue growth and sales nearly double the year-earlier level.
• Burry doubts CFO Colette Kress or another successor could seamlessly replace Huang’s influence over customers.
• He warns Nvidia’s investments in chip buyers could leave sales vulnerable if funding slows.

“The Big Short” investor Michael Burry expects Nvidia’s next earnings report to be “great,” but he is urging bulls to “get out,” warning that the crisis surrounding CEO Jensen Huang could threaten the financing and customer deals behind the chipmaker’s growth.

Burry Expects ‘Great’ NVDA Results, Then Trouble

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Burry expects a strong report, arguing that any fallout from Huang’s crisis would take time to show up in Nvidia’s results. “The quarter to be reported in less than a week is already on the books. It will be great,” he said. “Everything was in place, all the terms, all the architecture. And it will take time for this Byzantine web to untangle and unwind.”

However, he sees the results as another chance for bulls to sell. “NVIDIA bulls will have another fluffy big chance to get out. Get out.” Nvidia reports next week for the quarter ended Oct. 25. The company previously forecast revenue of $108 billion, plus or minus 2%, and gross margins of about 74%.

On a quarter-over-quarter basis, Nvidia’s revenue is expected to climb 13% to $109.01 billion, while adjusted EPS is forecast to rise 11% to $2.47, according to Koyfin. EBITDA is projected to grow 12% to $73.08 billion.

On a year-over-year basis, revenue is expected to nearly double to $108.4 billion, according to Fiscal AI. EPS is forecast to jump to $2.46 from $1.25, while EBITDA is projected to reach $72.9 billion from $37.35 billion.

Why Burry Doubts A Smooth Huang Succession

Nvidia’s board launched an independent inquiry this week into whether foreign intelligence had targeted Huang. But directors backed him, saying they had no reason to believe company secrets or U.S. national security had been compromised. By Wednesday, directors were reportedly meeting to consider removing him after reports of two extramarital affairs. 

Burry blamed Huang for Nvidia’s alleged pressure on customers. “The Don has fallen. As well, a protection racket loses its black-jacketed enforcer,” he said. “The coercion, it seems, came from the top.” 

He also questioned whether CFO Colette Kress, a possible interim successor, could fill Huang’s role. “I do not see Colette or any new CEO replacing the Don seamlessly,” he said. Burry argued that replacing Huang would also mean replacing his influence over customers. “The Don was the Enforcer. NVIDIA is losing both.”

The investor said the leadership uncertainty added to his concerns about Nvidia’s financing and sales practices. “The key-man risk at NVIDIA always was a worry,” he said. “If only that were all.”

Burry Warns Nvidia’s AI Funding Could Slow

Burry warned that Nvidia’s investments in companies that buy its chips could leave sales vulnerable if funding slows. “The terms of trade and the architecture of financing were the secret sauce that supercharged an already-dominant technology,” he said.

Nvidia purchased $42.4 billion in equity securities in the six months ended July 26. In August, it announced preliminary partnerships with six financial groups, including Apollo and BlackRock, aimed at mobilizing more than $500 billion for AI infrastructure over time. 

Burry pointed to heavy borrowing across the system. “There is tremendous leverage through the system - I have found upwards of 76x,” he said. He expects Nvidia’s board to curb risk as it handles the leadership crisis, potentially slowing the flow of money to customers. “The threat for NVIDIA and its AI ecosystem is that the cash may cease to flow. New investments will be more tentative, if at all. There may even be write-offs.”

Burry: Customer Pushback Could Squeeze NVDA Margins

Burry alleged that Nvidia pushed customers to buy chips before their data centers were ready by threatening reduced future allocations, leaving unused equipment sitting in warehouses without depreciation. “The Don’s fall gives customers cover to slow down deals, push back, renegotiate terms, or simply walk to a competitor without fear of offending an NVIDIA Alpha,” he said.

He added that antitrust scrutiny could make it harder to maintain that pressure, exposing the gap between Nvidia’s rapid GPU releases and the time customers need to build data centers. “NVIDIA’s business will not disappear, but its growth may slow and, critically, its margins may fall,” he said.

Burry said Nvidia’s tech would provide greater protection if it relied less on those financing and sales arrangements. “Without all that, the company, with its software and hardware two-headed dragon, would be relatively fortified against a CEO’s transgressions,” he said. “Unfortunately, that company is not NVIDIA.” 

Burry Sees Growing Regulatory Risks For NVDA

The Justice Department was already examining Nvidia’s investments and sales practices before the board crisis. Burry expects renewed scrutiny of those issues and chip sales to China. Earlier this week, he said, “Nvidia’s mafia-like behavior investing in and making requirements of many players in the AI space has, to me, long seemed ripe for anti-trust prosecution.”

He also warned that Huang’s troubles could draw more attention. “The fallen attract all manner of opportunists, both righteous and repugnant.” 

Burry also questioned the timing of chip purchases by Megaspeed, the Nvidia customer linked to Huang’s reported relationship with Alice Huang. “If there is evidence here, it will not stay hidden. Nor will the absence of evidence prevent headlines and allegations,” he said. “I do not expect this to pass by quickly.”

He said that the crisis exposed the risks of Nvidia’s dependence on Huang: “Investors must be aware that absolute power absolutely corrupts, and when a key man is that far out on the ledge, there is risk of very personal failure.

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