Michael Burry warns of dramatic Nvidia crash amid AI bubble fears

The conditions for an aggressive fall in Nvidia stock are as strong as they have been in history, according to Big Short investor Michael Burry. In a series of recent posts, he argued that the chipmaker's reliance on a handful of buyers and the unsustainable nature of current AI spending point toward a collapse.

Burry suggests the next decline could be more severe than Nvidia’s previous major crashes, which saw the stock drop between 43% and 67%. His skepticism stems from market data showing a dearth of hedging activity and trading volumes that have hit their lowest levels since 1999. Because structural demand appears thin, he anticipates a vacuum of buyers should the price begin to slide.

A central concern for Burry is Nvidia’s extreme customer concentration. Its top three clients account for 64% of its accounts receivable, leaving the company highly exposed to any slowdown in data-center buildouts. He points to the possibility of a "wicked bullwhip" effect, where inventory levels pushed forward to bolster current earnings create a sharp reversal in future demand.

Beyond balance sheets, Burry dismissed the current "tokenmaxxing" trend—where companies mandate aggressive AI usage—as a temporary, quota-driven phase. He argues that the market is mistakenly treating the most expensive period of AI infrastructure buildout as a permanent baseline for future growth. While Nvidia continues to release new chips and accelerate construction, Burry maintains that external demand is already compressing, leaving high-flying AI stocks increasingly vulnerable to a correction.