Nvidia denies Enron-style accounting accusations amid AI bubble fears

[Daniel Sims]

The big picture: The AI boom, largely powered by Nvidia, has long drawn comparisons to the dot-com bubble from the late 1990s and early 2000s. However, scrutiny of the company's latest rosy quarterly report has compelled Nvidia to defend itself against comparisons to another financial earthquake from two decades ago, the Enron scandal.

In a recently uncovered memo to Wall Street investors, Nvidia rejected multiple accusations that it is mismanaging stock, misrepresenting the long-term usefulness of its chips, and cooking its books in a way similar to disgraced energy company Enron. Although Nvidia's defense appears sound, the allegations overlook another key aspect of the AI boom that has also drawn comparisons to Enron.

After the chip seller reported $57 billion in quarterly revenue last week, investor Michael Burry criticized Nvidia for stock buybacks and stock-based compensation dilution. Burry's prophetic bet against mortgage-backed securities before the 2008 financial crisis was immortalized in the film "The Big Short."

Nvidia should have published this in an 8-K filing instead of just emailing a memo to Wall Street sell-side analysts. https://t.co/dwmkuLieNd pic.twitter.com/UlQyd6bC1g

– tae kim (@firstadopter) November 24, 2025

Around the same time, a Substack post from Pet Express CEO Shanaka Anslem Perera claimed that an algorithm detected irregularities in Nvidia's quarterly statement. The lengthy critique directly mentioned Enron, which illegally hid its debts and inflated its value before going bankrupt in December 2000.

Although Macro Strategist George Pearkes exhaustively excoriated Perera's viral post and accused it of being AI-generated, Nvidia felt the need to respond to it and to Burry's comments. In the memo, which Barrons and The Verge authenticated, the company called Burry's calculations inaccurate and refuted claims that it obscures debt with special purpose vehicles, a key component of Enron's fraud.

Enron created the firm Chewco as a special purpose vehicle to offset its debts, and an analysis from earlier this month by The Verge's Elizabeth Lopatto theorizes that CoreWeave and other neocloud companies could be serving a similar purpose for Nvidia. Their business model of renting AI server infrastructure to large investors in the technology, such as Microsoft, doesn't appear to be viable in the long term, and it seems to mostly benefit Nvidia by shouldering its risks.

Nvidia emailed a memo to Wall Street sell side analysts to push back on my arguments.
I stand by my analysis. Obviously, the full analysis does not fit in a tweet. I will release on my timeline.
The first post in The Heretic's Guide to AI's Stars "Supply-Side Gluttony" is up…

– Cassandra Unchained (@michaeljburry) November 24, 2025

CoreWeave, Crusoe, Lambda, and other neocloud companies are technically independent from Nvidia, so they don't meet the definition of special interest vehicles. Another crucial difference is that, while Enron lied about its business, Team Green's behavior is entirely in the open.

Even if the chip seller's actions are completely legal, concerns about the AI bubble are growing. Nvidia is almost the only company profiting from the AI boom because nearly everyone else is investing in it by ordering Nvidia's GPUs.

The hype is based on the idea that AI will transform productivity, and it might, but definitive proof has yet to emerge. Because of that growing gap between market valuations and fundamental principles, Burry recently shuttered his hedge fund.

Permalink to story:

Nvidia denies Enron-style accounting accusations amid AI bubble fears

 

[yRaz]

It's fraud with enough extra steps to not be considered fraud.

 

[seeprime]

It'll be interesting to see what happens when the current fad of circular investments of big tech companies amongst each other eventually stops.

 

[yRaz]

It'll be interesting to see what happens when the current fad of circular investments of big tech companies amongst each other eventually stops.

The crash will come, the stock prices they got loans against will plummet in value, the banks will ask for their money back and they won't have it. Very similar to what happened to the 2008 financial crisis. The difference this time is instead of the crash starting from the subprime loan market and work its way up, this crisis is going to work it's way from the top down. People don't seem to get the trillion dollar corporations are the new sub prime lenders. People are losing their s*** over AI stocks the same way they did with mortgage backed securities. Those AAA mortgage back securities sound anything like the AAA credit rating of these AI tech stocks? I also think something similar happened during the dotcom bubble.

 

[techdude1]

So the American AI bubble's gift to mankind is a lot of chatbots and sex bots?..lol

 

[SRB]

While Apple, AMD, Microsoft, and a few others might get through this. Bruised and battered, but live. Most of theses companies are investing more in AI than the make and don't have other sources of revenue. The only thing that should worry the ones that can weather it, is the *****ic stock market. It looks more like a casino than investment vehicle, and if you dabble in AI, the will sell off your stock along with the actual losers. They won't know any better or care.

I hope someone can find a genuine, marketable use for AI, otherwise it could take most of the tech sector with it.

 

[James321]

The question should be WHY?

This hole AI push seems irrational, like they are mind control to do that?

Well greed does funny things to people, but this is just over the top.

 

[yRaz]

The question should be WHY?

This hole AI push seems irrational, like they are mind control to do that?

Well greed does funny things to people, but this is just over the top.

Because money

So the American AI bubble's gift to mankind is a lot of chatbots and sex bots?..lol

You're welcome

 

[daffy duck]

It's fraud Jim but not as we know, not as we know, not as we know it.

 

[Dirtronix]

Electric utilities are rushing to meet the demand of all of these proposed AI data centers. Here lies an unseen problem. The national electric grid has been in need of upgrading for some time. Add to this all of these data centers that are proclaimed to be 1GW or more in power usage and this will become everyone's problem.

Most high voltage transformers over 50kV must come from either Siemens in Europe, or Hitachi in Japan. They require a deposit and normally take 6 months to a year to deliver. As a comparison, the largest nuclear plant in the U.S. is plant Vogtle in Georgia. Reactors 3 and 4 are now on line. Each of the 4 produces a maximum output of 935 Megawatts. That's enough output for 3 or maybe 4 AI data centers.

A cloud data center's load fluctuates, but over time is predictable. Power companies can make adjustments in output to flatten the overall load. An AI data center's load is similar to a very large switch, it's either on or off. Nuclear plants cannot rapidly adjust load; they run constant. The variations in load on the grid are made up by conventional coal and gas fired plants. These conventional plants can adjust relatively quickly to normal load pattern changes in the grid. However, changes of up to 1GW might be rather difficult if not impossible. Battery farms will be required to smooth out load differences to the grid.

This scenario is setting up to cost everyone, whether you're involved in AI or not. Data centers proposed or under construction when the "thinning of the herd" happens will cause quite a spike in electric costs. Electric utilities are legal monopolies. Pronounced: "Guaranteed by the state's Public Utility Commission to make a profit." Who pays for all the transformers, battery farms and sub stations that are under construction or on order when the thinning starts?

As French economist Bastait said over 100 years ago, "That which is seen... and that which is unseen."

 

[scoffer]

Look forward to seeing Leather-Jacket -Man being escorted off the premises in handcuffs..........

 

[Plutoisaplanet]

The depreciation argument from Michael Burry is flat out wrong. He doesn’t seem to understand how GAAP depreciation works. AI companies are making revenue from that capital, therefore its lifetime continues.

Burry makes money by making businesses look bad, causing people to sell their investments in whatever he’s shorting. It’s reasonable to be invested in AI considering it is continually developing. The fact that some jobs are being lost to AI is literal proof it’s useful enough to save businesses that cost in labor. As long as this continues happening, then AI is obviously becoming more profitable and less of a bubble.

Here’s a clip where they discuss Burry’s arguments:

 

[OortCloud]

I hope it bursts soon, we are boiling our planet alive and since that loathsome sh1t-stain on the rectal passage of humanity, Trumpaedo got in power it's just drill baby drill with zero checks and balances.

 

[pnntmp]

What a disgusting manipulative pile of insinuations.

There is a very strong push to start a panic selloff, and this article is an obvious part of it.
Any parallels between Enron and Nvidia are outright ridiculous.

Nvidia does not need to "defend itself".
Phrases like "Enron-style", "another financial earthquake" etc. etc. etc. are a brainless attempt to imply it's something on the verge of collapse, when in fact Nvidia is booked for years ahead and people are cutting throats for their GPUs.