Burry Flags Nvidia’s $95.2B Purchase Obligations as Echo of Cisco's Bubble Era
Michael Burry warns that Nvidia's purchase obligations have surged to $95.2 billion, surpassing Cisco's dot-com peak commitments and echoing the structural risks that led to Cisco's stock collapse. He cautions that locking in long-term supply chain capacity before demand is confirmed could repeat Cisco’s inventory overhang scenario.
1. Burry Highlights Nvidia's Purchase Obligations
Michael Burry draws attention to Nvidia's Form 10-K showing purchase obligations jumped from $16.1 billion to $95.2 billion over one year, with total supply commitments reaching approximately $117 billion. He argues this shift reflects a permanent structural change in Nvidia's operating model rather than a temporary response to market conditions.
2. Cisco Dot-Com Parallel
Burry cites Cisco Systems at the 2000 internet boom as a cautionary tale, when aggressive supply contracts for projected 50% growth left the company with billions in unusable inventory as tech spending collapsed and its stock plunged over 80%.
3. Analyst Pushback and Market Debate
While some analysts increased Nvidia's price target to $300, viewing the long-term supplier commitments as a sign of confidence in future AI platforms, Burry insists the strategy embeds risk by locking in capacity before demand visibility, potentially triggering an inventory overhang if growth projections aren't met.