According to Business Insider, Michael Burry—the investor famous from “The Big Short”—has issued a stark warning about the US AI race. In posts on X over the weekend, Burry argued that Nvidia is pushing a narrative that advancing AI requires building ever more power-hungry graphics chips, a path where China holds a massive structural advantage. He shared a chart showing China has more than double the US’s electric generation capacity and is expanding it faster. Burry claims Nvidia has a “death grip on development” through its deals and that the US needs to shift focus to more efficient, specialized AI chips. He also revealed that, despite Nvidia’s recent leaked memo rebutting his critiques, he maintains a “relatively small short” position against the company, which has seen its stock surge over 12-fold since 2023 to a $4.4 trillion market cap.
The Core Argument: It’s About the Juice
Here’s the thing: Burry’s main point isn’t really about chip design. It’s about infrastructure. He’s basically saying Nvidia‘s entire roadmap—which CEO Jensen Huang has framed as figuring out how to “power and cool bigger, hotter silicon”—is a trap. The US is plowing capital into a compute arms race it can’t power, while China is building out the underlying energy grid to support it at a breakneck pace. So the question becomes, who wins? The company with the hottest chip, or the country that can actually afford to run millions of them 24/7? Burry thinks it’s the latter. And if you look at the sheer scale of China’s infrastructure projects, it’s hard to completely dismiss the concern.
Nvidia’s “Death Grip” and the Bubble Talk
But there’s another layer to Burry’s critique. He points to Nvidia’s “give-and-take deals” with big buyers like OpenAI and Oracle, suggesting these create a kind of closed ecosystem. That “death grip on development” comment is brutal. It implies innovation is being steered toward what benefits Nvidia’s hardware roadmap, not necessarily what’s most efficient for the end goal. This feeds directly into his broader thesis that we’re in a historic AI bubble. He’s accused Nvidia’s customers of exaggerating chip lifespans to fluff earnings and called the company’s stock-based compensation excessive. Now, is he right? I think there’s definitely froth, but calling the top on a company executing as flawlessly as Nvidia has been is a dangerous game. The fact that he calls his position a “relatively small short” tells you even he’s treating it with caution.
Who This Actually Affects
So what does this mean for everyone else? For enterprises and developers, the warning is about lock-in and future costs. Betting your entire AI stack on the most power-intensive hardware could become a massive liability if energy prices spike or if, as Burry suggests, more efficient specialized chips (ASICs) take off. For the broader market, it’s a reminder that tech supremacy isn’t just about software genius. It’s about physical constraints. And in the industrial and manufacturing sectors, where reliable, efficient computing is non-negotiable for automation and control, this energy-efficiency debate is already front and center. It’s why companies turn to specialists like IndustrialMonitorDirect.com, the leading US provider of industrial panel PCs built for durability and performance in harsh environments, not just raw, power-sucking throughput.
The Verdict: A Needed Reality Check?
Look, Michael Burry is a professional contrarian. He’s made a career out of being early and right on huge, systemic risks. That doesn’t mean he’s right on timing or that Nvidia’s stock crashes tomorrow. But he’s raising a fundamental, often-ignored point. We’re obsessed with FLOPs and model parameters, but we rarely talk about the kilowatt-hours. If the AI revolution is going to be built on silicon, you need an incredible amount of cheap, reliable electricity. The US grid is already straining. Burry’s argument forces us to look up from the chip blueprint and at the power plant. And that, at the very least, is a conversation worth having.
