So Nvidia just had to send out a memo basically saying “We’re not crooks, we promise!” Which, let’s be honest, is never a great look. It’s like when your friend insists they’re “totally fine” after their third tequila shot – technically possible, but you’re keeping an eye on them.
Here’s the drama: NVDA has been absolutely crushing it, up over 1,000% in three years thanks to the AI gold rush. Everyone and their grandmother wants those sweet, sweet GPUs to power their ChatGPT dreams. The company is now worth $4.3 trillion, which is more than most countries’ entire economies. Wild times.
But some very smart (and very rich) people think this whole thing smells fishier than a gas station sushi platter. They’re calling Nvidia the “Enron of AI,” which is basically the financial equivalent of calling someone’s cooking “interesting” – it’s not a compliment.
The Accusation Station
The beef is over something called vendor financing – basically when companies lend money to customers so they can buy their products. It’s like fronting your broke friend money for concert tickets and then acting surprised when they “pay you back.” Enron and telecom giant Lucent pulled this trick to juice their numbers before spectacularly face-planting.
Nvidia fired back yesterday with all the enthusiasm of someone defending their Yelp reviews. They pointed out that customers pay their bills in 53 days (pretty reasonable) and insisted their business model is refreshingly simple: “We make awesome chips, people buy them, they pay us.” No fancy accounting gymnastics required.
The Short Squad Strikes Back
But the bears aren’t backing down. Michael Burry – yes, the “Big Short” guy who saw 2008 coming – recently loaded up on NVDA put options before shutting down his fund. That’s like Nostradamus dropping a prediction and then immediately going off the grid. Ominous much?
Jim Chanos, who famously called Enron’s collapse, is also betting against Nvidia. He’s worried about all the debt floating around AI companies who are borrowing money to buy chips. If the AI hype train derails, Nvidia could be left holding the bag.
Even Elliott Management, with their $70 billion war chest, has been shorting NVDA all year. They’ve got $600 million riding on the stock going down, calling AI “overhyped” in client letters. When hedge fund titans start using air quotes around “revolutionary technology,” you know the skepticism is real.
The Bottom Line
Look, Nvidia’s investments in AI startups like OpenAI and CoreWeave do raise eyebrows. It’s a bit like a restaurant owner investing in the farm that supplies their vegetables – not necessarily shady, but it makes the books more complicated.
The truth is probably somewhere in the middle. Nvidia makes legitimately great products that everyone wants right now. But when you’re growing this fast and this big, every move gets scrutinized like a celebrity’s Instagram posts. Sometimes a company really is just crushing it. Sometimes it’s smoke and mirrors. The trick is figuring out which one you’re looking at before everyone else does.