Michael Burry warned that Nvidia faces strong conditions for an aggressive stock drop, pointing to record-low trading volume on a 50-day basis, limited hedging activity, and a customer concentration that could amplify downside. He also argued the “tokenmaxxing
Nvidia stock has been priced for speed—new chips, fast data-center builds, and demand that seems to keep outrunning capacity. But Michael Burry is looking at the tape and the balance sheet and seeing a different kind of momentum: conditions for a fall that could be harsher than what investors have already lived through.
In a Monday post. the investor known for “The Big Short” wrote that “the conditions for an aggressive fall are as strong as they have been in the history of the stock.” He said Nvidia’s next decline could be “more dramatic” than its last three big crashes of 56% in 2018. 67% in 2021. and 43% in 2025.
Burry said his view is grounded in options and stock market volume as well as fundamentals. He pointed to trading volumes of Nvidia stock on a 50-day moving average basis being at their “lowest since 1999.” He also described what he sees as a market structure problem: a “dearth of hedging activity. ” adding that it is cheaper to buy put options on Nvidia than for similar stocks.
If Nvidia does fall, Burry expects “very few buyers on the way down,” he wrote. His reasoning is twofold—insufficient structural demand and market makers having to back off.
The warning gets sharper in another post on Friday, where Burry focused on customer concentration, calling it “off the charts.” He said that concentration exposes Nvidia to a major revenue hit if its biggest buyers pull back.
He pointed to Nvidia’s recent earnings. saying the top three customers were responsible for 64% of its accounts receivable. up from 56% in the preceding quarter. Burry also said Nvidia’s No. 1 customer accounted for more of its accounts receivable, but less of its revenue, for the first time in 13 quarters.
“This is not quite a smoking gun, but more of a finding of a finger on the trigger,” he wrote.
Burry then raised a supply-and-demand timing worry. arguing Microsoft pulled forward inventory that it “does not really need” as it slows down its data-center buildout. He said the move was made to keep its priority spot for Nvidia’s next chip—or alternatively that Nvidia pushed inventory forward to flatter its earnings.
From there, he described how small shifts in end-customer demand can ricochet through the supply chain. He used the phrase “wicked bullwhip,” referring to how a small change in customer demand can reverberate through a supply chain and have a more pronounced effect on suppliers.
A second thread runs through both posts: Burry’s claim that the AI boom may be overspending on the wrong part of the cycle. He singled out “tokenmaxxing”—companies encouraging employees to use AI models as much as possible—as a “crazy, rushed, temporary phase.”
Burry said “tokenmaxxing” is not simply heavy AI use. He called it quota-driven. leaderboard-driven. and management-mandated “overconsumption.” In his view. the trend won’t support the AI industry long term. arguing that “everyone is already using it. ” with many users acting “as frantically and expensively as possible during this mass training phase.”.
He warned that the market is capitalizing the most expensive phase of AI adoption “as if it were normal and indicative of future demand.” He added: “Nvidia is releasing new chips every year. data centers are being put up as fast as possible. power plants are being built as fast as possible. and external demand is already compressing.”.
Nvidia did not immediately respond to a request for comment outside normal business hours.
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