Nvidia selloff deepens as Michael Burry stays bearish, sees near-term trading rebound

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Nvidia selloff and Burry outlook

Highlights

Nvidia shares fell nearly 10% Tuesday to about $169, extending a decline of more than 30% from the October 6 peak of $243.
Michael Burry remains bearish, warning of faster-than-expected erosion of Nvidia’s competitive edge and rising regulatory risks, despite forecasting a near-term trading rebound.
Nvidia's more than $1.7 trillion market value loss in one month surpasses Meta's capitalization, amid heightened regulatory and AI spending concerns.

Burry flags short-term trade, long-term risks

As reported by Business Insider, Burry wrote in a Tuesday Substack post that he was surprised by how sharply investors had turned against Nvidia after recent revelations involving Chief Executive Jensen Huang.

Burry said he could see the stock rebounding in the near term because he does not believe the controversy will severely damage Nvidia's core business economics. Even so, he said he is not tempted to buy and hold the shares, arguing that the company's competitive edge may erode faster over the next five years than he had previously expected.

He also warned that the episode could increase the risk of tighter U.S. scrutiny over Nvidia's chip trade with China and prompt investigations into its business practices. Burry described Nvidia's dealings with other AI companies as "mafia-like behavior" and suggested regulators would have ample grounds for closer examination if they chose to act.

Share slump adds to broader AI valuation concerns

Nvidia stock falls nearly 10% after the latest scandal and closes Tuesday at about $169 a share, according to the source text. The shares are down more than 30% from their October 6 record high of roughly $243, hit by concerns over excessive AI spending and fears of stricter regulation after Democrats won control of the House and Senate last week.

The decline wipes out more than $1.7 trillion in Nvidia's market value in just over a month, a sum larger than Meta's entire market capitalization. Nvidia's stock nevertheless rises about 4% in premarket trading on Wednesday, signaling that some investors may already be weighing the selloff against the company's still-dominant position in AI chips.

Burry has been publicly bearish on Nvidia for months. He said in earlier posts that he had shorted the VanEck Semiconductor ETF, where Nvidia made up nearly a fifth of the portfolio, and had also used put options on Nvidia to gain leveraged downside exposure. He has argued since January that Nvidia is the clearest vehicle for betting against the AI boom because of its dependence on hyperscaler spending, while repeatedly warning about aggressive accounting, circular financing, hidden debt, overinvestment in chip and data center capacity, and high stock-based compensation across the sector.

Previously, we highlighted the AI stocks plunge as oil hit $110 a barrel, stoking inflation fears and valuation worries.

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