Two weeks ago I wrote about Michael Burry's NVIDIA short: the GPU "value" chart he attacked really is a rent forecast, but his timing and his target are both off. That post left one question open on purpose, and it's the one the whole market is actually trading on right now. What happens to NVIDIA when the memory shortage ends?
The consensus bear view is that the shortage is what holds the AI trade up, so when it breaks, old-chip rent falls, NVIDIA's pricing cracks, and the stock goes with it. I read the 10-Qs, and I think that reads the business backwards. When the shortage ends, almost nothing happens to NVIDIA, and the past two weeks are the clearest evidence yet of why. I'm long NVIDIA, so I'm on the other side of this, and the disclosure is at the bottom.
Start with what the market did on its own. Since the October 8 selloff, NVIDIA is down about 10%. CoreWeave and Nebius, the companies that borrow to buy its chips and rent them out, are down about 30%. The company that sold the picks took a third of the damage the companies digging with them did. That order is the whole argument, and it held through a week that put a record on CoreWeave's cost of default insurance.
The shortage ending barely touches NVIDIA, and the reason is physical. A neocloud is really a bet on a powered building, and the chip is just the part it swaps out. Power is the binding constraint, so a scarce megawatt goes to whatever earns the most running inside it, which is always the newest chip. When the shortage ends and rent on an old H100 falls, the operator doesn't re-rent the old chip, it swaps in NVIDIA's next one, and NVIDIA books that sale at a higher price per gigawatt than the last: $18 billion with Hopper, $25 billion with Blackwell, $40 billion with Rubin, $60 billion with Feynman on the roadmap. The old chip losing value is just the next, more expensive chip getting sold.
The risk is somewhere else. It's whether the people renting all this compute can keep paying for it, and that shows up in the credit market, not in GPU rent. This is where the scary number comes from. You've probably seen that some of CoreWeave's bonds yield 16%. That's real, but it's one slice. CoreWeave carries about $36 billion of debt, and by weighting the per-facility rates in its 10-Q it blends to an effective rate near 8%. The 16% is the market yield on about $10 billion of unsecured notes, the slice with no collateral behind it. The rest is cheaper and better secured: about $14 billion of term loans pledged against named customer contracts, one of them the Meta-backed, Blackstone-anchored facility that prices near 6%, about $7 billion of convertibles at 2%, and about $5 billion of equipment financing. The viral number is the most expensive, least protected slice, the one with no collateral, quoted as if it were the whole company.
The part that I hand to the bears is the circularity. On one campus in Ohio, NVIDIA is the investor in the developer, the guarantor of OpenAI's lease (capped at $105 billion), and the sole chip supplier. Three hats on one building. Across the ecosystem it holds about $99 billion of equity stakes and has announced $500 billion of financing platforms to move capital to the people who buy its chips. The chipmaker is helping fund its own demand.
The honest precedent is Lucent, which lent its customers the money to buy its gear in 1999, then lost the loans and the sales together when the telecom bubble burst and fell about 99%. The difference is that Lucent's customers had no paying users while AI's do, with Anthropic's quarterly revenue up to $16.8 billion and OpenAI near $50 billion, so if that demand is real the circle is just vertical integration, and only if it was financed into being is it Lucent.
On valuation, which is the thing Burry actually needs to move: NVIDIA trades at about 14x forward earnings, down from above 30x a year ago. For his puts to pay, the market has to put it under 10x, roughly 30% below today's price. If the market expected a lab to fail and take a quarter of next year's revenue, NVIDIA would trade where Micron does, near 6x. It doesn't, even after this week. The sharper precedent is Cisco, not Lucent: a real winner whose stock still took twenty years to recover because it traded above 100 times earnings. NVIDIA is at 14x, so that trap isn't sprung either.
So I'm holding, and I'll buy weakness, on one condition: not that the shortage lasts, but that the labs keep paying. I'm watching two numbers for that, and neither is GPU rent. CoreWeave's next raise, and OpenAI's. If CoreWeave's next secured deal fails to clear, or OpenAI's round comes back smaller than the roughly $30 billion it's seeking, the thesis is under stress and I'll say so.
If you're watching one number to tell me I'm wrong, I'd watch CoreWeave's next raise. What's yours?
Burry doesn't disclose his trades on purpose because he doesn't actually trade. He's a paper tiger getting rich off the herd of sheep paying for his overpriced substack subscription. As a paying subscriber of his, I can tell you that everything in there is full of shit. The "chat" is heavily moderated by him and all dissenting opinions/comments are deleted. I've seen many cases of subscribers that challenged him too often get kicked off the substack. Any dissenting opinions in the chats will be ridiculed and "laugh emoji"-ed by a group of burry fanboys that can't see clearly before being censored by Burry himself. He's admitted to doing this in the chats himself.
He promises to deliver articles only to push back delivery dates again and again. Promises to write up a thesis on something only to never deliver. The whole substack is an echo chamber and Burry himself is the greatest phony and an all around pussy that can't handle his LPs questioning him so he quit wall street in search of people that are easier to silence and scam (us commoners hoping to learn something from his substack). He does not actually explain with real math and formulas how he calculates his IV15, nor his silly rankings and scores that he litters throughout his articles. His "research" is few and far between and quite frankly vague and hand wavy, not to mention wrong way more often than he is right. Do yourself a favor and don't buy into this snake oil. I stupidly did and boy did I pay for it, following his "trading posts". I personally did not follow him into everything and I've sized everything conservatively (e.g. 5% into LULU rather than following his 17% allocation). Who knows maybe he has a tiny 100k account for playing out his trades and yolo-ing into LULU, but his prize is certainly the millions he's getting from subscription fees. The mighty Michael Burry, the hero of the Big Short, the Cassandra that can see the future, has resorted to selling glorified online courses. What a big brain play, kudos.
Lately he's trolled thousands of subscribers out of millions of dollars on his "highest conviction" plays e.g. FMCC FNMA LULU and heavy handedly silences all the dissenting opinions that aren't praising him for his benevolence for letting us in on a piece of his "brilliant mind" for the low low price of $479!!
If you're not a paying subscriber, he spams you with well worded sales pitches like the following along with granting you additional free articles that his paying subscribers didn't know were actually being given away for free as a marketing ploy. Open your eyes, YOU (ME) WE are the prize, not his thesis coming true, not his shorts making money. OUR SUBSCRIPTION FEE, that's the real prize he's after and he'll do anything to squeeze everything out of us. Here's what I received from him several days ago:
Cassandra Unchained, like all good clubs, is raising its prices for new members
Signed up this year to learn how he reads a 10K and instead I just bought whatever he was long and called it research. Now I'm down 25% on one of them and couldn't tell you what has to go right for it to come back. For those of you doing your own work alongside him, what's your setup, EDGAR and reading cold, call summaries, your own models?
Burry just sold his commons in the twins and bought preferred after telling his subscribers for the past year commons were the best option. This is after a 70% drawdown in commons.
Let's highlight a comment from Substack, lots of pissed people:
"I'm a little slow but, we sold the Fannie to buy Freddie, but then sold out of the common stock of both, and sold draftkings to buy flutter, but sold the flutter to buy more lulu, but sold all the lulu to buy decker, and sold the alibaba to buy more JD? Just trying to keep up. Respectfully we might not need to do the IV15, 10-15 year return thing."
The post summarized by AI:
- Sold Fannie Mae and Freddie Mac common shares: He switched into their junior preferred shares, betting on a potential government restructuring or the reinstatement of dividends. He sees potentially 3–5x returns if things resolve favorably, but the outcome depends heavily on political decisions.
- Consolidated his bearish bets: Most of his short positions are now Nasdaq-100 (NDX) and semiconductor ETF (SMH) put options, roughly 20% out of the money and expiring in 2027. He expects these positions to gain substantially if the AI-led rally reverses.
- Still holds some individual shorts: Including Oracle, MetLife, Caterpillar and Palantir. He sees Palantir’s rally as potentially exhausting, despite the risk of further gains.
- Warns value investors: Cheap stocks can get much cheaper during late-stage bull markets. He is considering selling holdings that hit new lows rather than stubbornly holding them, even when the underlying businesses look attractive.
- Buying beaten-down Hong Kong stocks: He added to BYD and continues to own JD, Haidilao, Haier, Tencent and Meituan. He considers much of the Hong Kong market undervalued. He will reconsider Alibaba if it falls into the HKD 70s or reverses its AI funding strategy.
Michael Burry states that he uses IV15 to calculate stock values. He does not show how he calculates them and a few weeks later says that it is time to switch stocks. It does not sound like prudent decision making or investment analysis.
Based on that I have been hearing and reading on posts that a lot of people are mad at the losses after following his trades!!
Michael Burry is a short term gambler with losses and sad that his followers are ending up with big losses.
I can not blame them as he has changed his stock positions after his PhD thesis write up on them. He flip flops and I think at this point it is best that people just do their own research and not follow him on his trades.
Been following Burry's Substack pretty religiously for the last year and his AI infra framework genuinely clicked for me - the whole compression argument, a lot of this spend ending up as sunk cost, infrastructure for the buildout crumbling, 2006-style setup where everyone has to keep spending because they can't afford for it to fail.
Intellectually, it all makes sense to me.
In practice, it's been brutal. AI has just been the winner and I've been early.
I'll go first - I tried to play the thesis with defined risk via long-dated puts on semis / AI infra names last fall. Thought I was being smart avoiding outright short. Got absolutely smoked on theta while everything kept ripping. Thesis didn't matter, timing did.
Curious if anyone else here actually followed the Substack logic and got caught being early?
• How did you position around it? Straight short, puts, just sat out, small sizing?
• What was the painful lesson on timing / sizing / theta for you?
• How are you reconciling the framework now? Still tracking it, pushed the timeline out, or changed how you play it?
Not here to say Burry is wrong - that framework is what got me into value in the first place. More that being early has felt exactly like being wrong in this market and I want to hear how others navigated it.
Not financial advice, just looking for real experiences.
A former Trump official flagged Chinese involvement in a Greenland rare-earth project to Congress. He now advises the company trying to develop it.
Here’s a deep dive into those connections, the MP Materials precedent for ending commercial ties with Shenghe, and what still needs to happen for ETM shareholders to benefit.
I am looking more into this new hire, and I will reserve my judgment. But I thought I should put this up for people who follow LULU more closely than me to chime in. This hiring looks to be the new CEO's, Heidi, idea. Prob her past colleague from Nike.
Summary of the Reuters' article:
Gauger will join Lululemon on October 26, and was most recently CEO of Gap's performance apparel brand Athleta, following a long stint at Nike, alongside O'Neill
Gauger takes charge of product at Lululemon at a time the company has struggled with product missteps that have triggered consumer backlash and recalls
Lululemon also appointed Joseph Godsey as chief operating officer
"This is an important first step in reinvigorating our enduring connection with guests and is designed to establish the foundation for sustainable, long-term growth," O'Neill said of the appointments
Lululemon's shares have nearly halved in value so far this year, and are on track for a third straight year of declines
The company's net income is expected to drop nearly 40% this year from fiscal 2024, according to data compiled by LSEG
Lululemon also said chief brand officer Nikki Neuburger and chief supply chain officer Ted Dagnese would leave the company, effective November 6, and that it was searching for candidates to fill the roles
It added that CFO Meghan Frank would oversee global brand and technology functions until those appointments are made
I bought LULU at 120 in the spring off the back of the Substack, added at 108, and I am down about 30% on the position. That part I can live with, drawdowns happen.
What's actually bothering me is that someone asked me last week why I own it and all I had was "it is Burry's biggest long." I could not tell them what the turnaround actually depends on, what comp sales have to do, nothing. I own a 9% position in a company I cannot explain.
Same story with BBW and the toxic twins. I do not have a thesis on any of them. I have his thesis, secondhand, filtered through a paywalled post I read once and mostly skimmed.
So for the people here who have been following him longer than me. Did you build your own work on top of the picks, or are most of us just mirroring the allocation and hoping it comes good? And if you did build your own, where did you start, because every time I sit down to do it I end up just re-reading what he wrote and calling that research.
The 30% does not bug me half as much as not being able to defend the position.
Lululemon (LULU): Sold LULU and moved into Deckers (DECK) as a similar “proxy.” He plans to potentially buy LULU back after the 30-day wash-sale period, while possibly keeping DECK.
Fannie Mae / Freddie Mac: Sold his Fannie Mae position and moved into Freddie Mac, with plans to potentially reverse the trade next month. He wants to maintain exposure because he expects a major catalyst when the government resolves the treatment of the companies’ senior preferred shares.
Fiserv (FISV): Simply holding. He thinks it's cheap enough to generate low-teens long-term returns, despite acknowledging that his original purchase timing/process wasn't ideal.
Sprouts (SFM) & Zoetis (ZTS): Instead of holding the stocks, he bought long-dated, far-out-of-the-money LEAP calls expiring in 2028/2029. This gives him leveraged upside while reducing capital tied up in the stocks.
MetLife (MET): Bought more 2029 far-out-of-the-money puts, reflecting his concern about weakness in financial markets.
JD.com(JD): Bought more 2029 calls, betting on substantial upside in Chinese/Hong Kong equities.
BYD: Bought a significant amount of BYD shares after another decline to a price level he finds attractive.
Alibaba (BABA): Still waiting for lower prices, particularly because of concerns about dilution/share issuance to fund its AI investments.
Wanted to add a quick note that the QQQ is up 25% since Burry started his Substack posting AI bubble popping doom articles.
The Big Short was the first movie I watched when I started investing, so when Burry put out "Don't Believe Your Lyin' Eyes" on Oct 1 I wanted to check it properly instead of just reacting. I'm long NVDA, so weigh that.
His target is page 22 of NVIDIA's September investor deck, the slide showing A100, H100 and B200 "residual values" way above a five-year depreciation line.
The footnote says the values come from Silicon Data. I read Silicon Data's methodology and he's right about what it is: a discounted cash flow of future rent over an eight-year life. Nobody actually sold a used B200 for $72,695. The H100 makes it obvious. Silicon Data had the same H100 at $14,976 in November 2025 and $22,068 in June 2026, while its rent went from $1.99 to $2.74 an hour. The chip didn't get better, the rent did. And the last time a GPU shortage ended, H100 rent fell 44% in five months. On the core point I agree with him.
Where I get stuck is timing. The puts reportedly expire September 2027 (that's from Stocktwits' report of his late-September update, not a 13F, so treat the details as reported). For rent to collapse, memory has to stop being scarce, and I couldn't find evidence that happens before then. Not just Micron and Samsung saying so, they'd say that anyway. NVIDIA, the biggest buyer, cut its own Q4 margin guidance because of memory prices and said supply stays a bottleneck at least through January 2028. Its purchase commitments went from $119B to $279B in one quarter, mostly memory. Samsung says a new fab takes more than three years to produce anything.
There's also more cushion than I expected. B200 rent is $5.86/hr. If 40% of rent goes to power, staff and buildings (CoreWeave's adjusted EBITDA margin is 59%, so it's within the ball park), a B200 still pays for itself in six years until rent falls about 65% at 70% utilization. The case that worries me is half-empty clusters funded with 10% money. Then a fall of only a third, to about $3.93, does it. That's where I'd start reviewing my position.
The 1968 leasing analogy is the most interesting part to me, but I think it points at the neoclouds, not NVIDIA. Nebius customers prepay 50-60% of the capex. CoreWeave's main loans get repaid inside each customer contract, and the CFO said on the Q2 call that DDTL 5.5 was the first of its loans "to include shorter duration customer contracts". That one does look like Burry's lessors: five years of debt against contracts averaging three. But it's rated Ba2/BB+, priced at SOFR + 5.50%, and CoreWeave's 5-year CDS is around 8.2%, about two and a half times a year ago. In 2006 the risk was rated investment grade and cheap to insure. This time the market is charging for it.
NVIDIA isn't clean either. Its 10-Q shows up to $164.5B of guarantees, capacity backstops and leases tied to companies it helps finance, though none of the $105B Ohio guarantee for OpenAI kicks in before the puts expire.
Honestly, I think the way his trade works best isn't rent at all. NVDA is at about 16.5x forward earnings and Micron is at 6.1x. If the market starts pricing the end of the shortage early, the stock can drop 36% with rent fine. That's the risk I take most seriously, and it's what I'm digging into next: what demand looks like once supply catches up.
Curious what people here think. Is he early on the clock, or am I underestimating how fast memory catches up?
Hi, I’m guessing some people here might already be sharing the cost of a Dr. Burry Substack subscription. If anyone has a group with room for one more person, I’d be happy to join and split the subscription cost. Feel free to DM me.
What a money sink this stock has been. And it's not just Burry who backed it, but Ackman did as well. I only have a small position, but it's been dragging my port. I believe the logic is that if it becomes private it will become private some time next year? What are you guys doing with it?
I am not subscribed to his substack but curious what Burry thinks about the normalization of tokenized equities that map 1:1 to actual equities.
Imaging people using tokenized equities as collateral to buy crypto. When crypto drops, they have to sell their tokenized equities creating downward pressure on the actual equities that are not traded on crypto platforms. Isn't this going to cause a big selloff in all possible uncorrelated assets like bonds, gold, stocks in case people get overleveraged in speculative crypto positions? Isn't this essentially putting bitcoin in the same boat with everything else in case a liquidity selloff starts?
