① Ahead of NVIDIA's latest earnings release, "The Big Short" investor Michael Burry increased his short position in NVIDIA while simultaneously purchasing call options on the stock. ② Burry stated that his analysis indicates NVIDIA's monopoly status is limited in duration, which will lead to declining profit margins in the future. ③ He also expressed the view that NVIDIA "will not distribute sufficient profits to shareholders."
Cailian Press, August 28 (Editor: Bian Chun) Ahead of NVIDIA's latest earnings release, "The Big Short" investor Michael Burry has increased his short positions. $NVIDIA (NVDA.US)$ However, unlike before, he has also purchased call options on NVIDIA.
This indicates that while Burry remains bearish on NVIDIA, he acknowledges the possibility of a sharp surge in the stock price driven by earnings that exceed expectations.
In a post on Substack, Burry stated that he had purchased NVIDIA call options expiring in December with strike prices in the mid-to-high $200 range, characterizing this position as a hedge against his substantial short exposure.
"I did not make this trade to make money," Burry said, adding that he would not have executed the transaction at all if he did not already hold massive short and put option positions. He noted that this hedging position accounts for 3.5%–4% of his portfolio.
Burry stated that he has frequently employed this strategy to hedge short positions during earnings seasons in the past, but admitted that his "past track record has not been impressive."
Burry remarked that NVIDIA stock appears significantly undervalued on the surface, given its low price-to-earnings ratio and monopolistic pricing power. However, he pointed out that this appearance is misleading, and his theoretical valuation of NVIDIA is "far below the current market capitalization."
Burry stated that his analysis indicates NVIDIA's monopoly status is limited in duration, which will lead to declining profit margins in the future.
He further stated that he believes NVIDIA "will not distribute sufficient profits to shareholders," as the company may increasingly shift its focus toward capital expenditures and investments to diversify its business and continue driving revenue growth.
Burry stated that NVIDIA's continued investment "near and through the top of the bubble" could lead to a "stunning decline" in its profitability in the "not-too-distant future."
Despite his reservations about NVIDIA, Burry stated that the market's reaction following the earnings release was "nothing more than a coin toss." "The market does not believe [my assessment]," he said. "Perhaps confidence will be restored today [on the day of NVIDIA's earnings release], but it will only be temporary."
Furthermore, Burry has increased his short positions in Oracle, Palantir, NEBIUS, and Caterpillar.
Burry stated that his total equity short exposure currently exceeds 21% of his portfolio (excluding put options); meanwhile, he has also increased his holdings in Birkenstock and Freddie Mac.
NVIDIA's stock performance on Thursday corroborated Burry's short-term market outlook. Driven by earnings reported on Wednesday that comprehensively exceeded expectations, along with its first formal provision of definitive guidance projecting a 70% revenue growth for fiscal year 2028, NVIDIA's share price surged 8.74% to close at $227.98. Its total market capitalization skyrocketed to $5.49 trillion, marking a single-day increase of $441.5 billion (approximately RMB 2.97 trillion), the second-largest single-day gain in market capitalization in U.S. stock market history.