Nvidia CEO Jensen Huang pushed back on Michael Burry's bear case by pointing to rising GPU rental rates and years-old chips still generating revenue. Burry, who holds a short position on Nvidia, argues the company inflates profits by overstating how long its chips remain useful.
Huang made the case in a post on X, countering Burry's claim that the company overstates the useful life of its processors. The exchange keeps alive a public dispute over how Nvidia depreciates its GPUs and finances its AI customers.
Huang cites rising rental rates
Burry, who runs Scion Asset Management, contends that technology companies depreciate Nvidia GPUs over too long a period, which understates costs and inflates reported profits. He argues chips should be expensed over two to three years rather than the six years many companies currently use.
Huang responded to a post on X showing that H100 GPU rental rates rose 22% month-over-month to $3.28 per hour as of September 8. Huang shared the post on Tuesday, adding: According to Jensen Huang: "NVIDIA compute is fungible, durable and highly rentable. It is a productive, revenue-generating asset."
Nvidia's Ampere A100 chip, launched in mid-2020, still powers AI workloads six years later. Neocloud provider CoreWeave signed a contract last month to rent A100 chips for AI processing through 2029, evidence Huang's camp cites against Burry's shorter depreciation timeline.
The circular financing dispute
Burry's broader criticism targets what he calls "circular financing," the idea that Nvidia helps fund the same customers who buy its chips. He has pointed to Nvidia's credit guarantee tied to an OpenAI data center project in Ohio, which caps at $105 billion and backs a facility with a 4.25 gigawatt IT load, according to Nvidia's second-quarter 10-Q filing.
Nvidia CFO Colette Kress has said the credit arrangements secure necessary infrastructure rather than artificially inflate chip sales. Nvidia maintains its chips typically stay in productive service for four to six years.
Burry has kept his short position on Nvidia stock, betting AI infrastructure spending is outrunning actual returns. Nvidia shares traded at $224.20, down 0.7%, a level that puts the stock at 28 times earnings.
Sources: Motley Fool, Crypto Briefing
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