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In 2008, a few people noticed the housing market was doing something… weird.

Most shrugged. One guy didn’t.

Michael Burry looked at mortgage bonds and saw physics breaking.

He bet against them and we know how that ended.

Now he’s staring at something else.

Chips.

The $95 Billion Question

Let’s start with the number that caught attention.

$16 billion.

That’s what Nvidia had in supply commitments a year ago.

Today?

$95 billion.

Total supply obligations now sit around $117 billion — nearly matching annual operating cash flow.

That’s acceleration.

And it’s what caught the attention of Michael Burry — the investor best known for spotting excess before it becomes obvious.

Here’s the story ⇩

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Burry called the surge “troubling.”

The issue isn’t demand today.

Demand for AI infrastructure is overwhelming.

The issue is commitment.

Nvidia has placed massive noncancelable purchase orders, meaning it is locking in supply before knowing exactly how final demand will look.

Part of this is structural — suppliers like TSMC now require longer-term agreements.

But structurally required doesn’t mean structurally risk-free.

When obligations grow sixfold in a year, flexibility shrinks.

And flexibility is what protects margins in downturns.

Burry didn’t just throw out a warning. He invoked history.

During the dot-com era, Cisco ramped supply commitments anticipating 50% annual growth.

→ Demand slowed.

Roughly 40% of inventory and supply obligations were written down when the cycle reversed.

→ The stock collapsed.

It wasn’t fraud but mismanagement.

It was overconfidence meeting slower reality.

That’s the historical echo Burry is highlighting.

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To be clear, Burry is not consensus.

Many analysts see the surge as strategic dominance.

Locking supply ensures Nvidia remains the most dependable provider in an AI market that some estimate could double toward $1.4 trillion in the coming years.

The argument is simple:

→ Demand shows no sign of slowing
→ AI infrastructure build-out is early
→ Supply control equals moat

To them, $95B is strategic.

In a world starving for GPUs, the company that locks supply wins.

Two interpretations.
Same data.

So Who’s Right?

That’s the wrong question.

The better one:

Are we in a supercycle? (supercycles absorb overcommitment)

Or a hot cycle? (hot cycles punish it)

So it’s about cycle durability.

High margins are easy when demand outstrips supply.

They’re harder when supply outstrips demand.

Right now, Nvidia’s margins reflect extreme demand and pricing power.

Burry’s warning is that extreme conditions rarely stay extreme forever.

The bullish view is that this time may be structurally different.

History says:
Cycles eventually normalize.

Innovation says:
Maybe not this one.

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Every boom starts with imagination. Then comes execution. Then comes scale.

Maybe this is the start of something historic.

Maybe it’s just another chapter in a very old cycle.

But there’s a moment in every major innovation wave when belief turns into certainty.

That’s when companies stop testing the waters and start pouring concrete.

Right now, Nvidia is pouring concrete.

Maybe that foundation supports a decade of exponential compute.

Maybe it turns out to be more than the cycle can carry.

The difference won’t show up tomorrow.

And somewhere in the middle of all this optimism, Michael Burry is just asking one old-fashioned question: what if the future isn’t perfectly priced?

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