Michael Burry just revealed his biggest move in Q1 2025: shorting 900,000 shares of Nvidia stock through put options.
That’s nearly half of his entire portfolio, betting against one of the largest companies in the US stock market.
For context, this is a stock that makes up 6.5% of the S&P 500 and has been one of the biggest drivers the market over the last 2 years.
Just over the last month, Nvidia has rallied 20%.
So, is Michael Burry once again seeing something that others are not?
Zooming out, Nvidia remains one of the most explosive stories in the stock market, up 960% from January 2023 to its peak in January 2025.
Earlier this year, Nvidia began dropping due to 2 major concerns:
First, worries over DeepSeek, a new large language model claiming superior performance with lower costs while not requiring Nvidia’s chips.
Second, the US export ban on Nvidia’s main AI chips to China.
Both concerns made the stock fall over 40%.
Although Nvidia has recovered most losses from these shocks, these remain very real concerns.
They could impact Nvidia’s sales trajectory and pull the stock price lower, potentially explaining Burry’s timing.
This naturally raises the question: Should we consider following Burry’s footsteps on the Nvidia short trade?
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The Data Behind Nvidia’s Growth
Looking at the facts, the correlation between Nvidia’s sales and total capital expenditures from the 3 largest cloud service providers (Amazon, Google, and Microsoft) is crystal clear.
Cloud service provider capital expenditures have been the main driver of Nvidia sales and the primary force behind the 941% increase in Nvidia’s earnings over the last 2 years.
All this earnings growth comes from a handful of tech giants allocating massive budgets toward AI infrastructure, translating into strong demand for Nvidia’s data center products, which are essential for AI training.
It’s understandable why some investors fear that if AI progress no longer requires larger models and more computing power, as DeepSeek might suggest, it could threaten Nvidia’s earnings.
But we believe this concern is overblown.
Contrary to market fears, AI-related capital expenditures remain at record highs today.
Despite DeepSeek, cloud service providers aren’t backing off from their spending in 2025:
- Amazon plans to deploy $100 billion
- Microsoft plans $80 billion
- Alphabet plans $75 billion
All primarily focusing on AI and cloud infrastructure.
Also, about 50 Wall Street analysts project that AI infrastructure spending will keep growing through 2028.
The China Export Ban Reality
If DeepSeek’s impact on capital expenditure isn’t a real concern, what about the export ban on Nvidia’s chips to China?
After all, China accounts for 12% of Nvidia’s revenue.
The latest US export restrictions could result in $15 billion in lost sales plus a $5.5 billion inventory charge.
This isn’t just a geopolitical headline – it’s a real revenue hit.
But it’s not the first time Nvidia has experienced something like this.
In October 2023, the US issued a similar ban on one of Nvidia’s main chips.
The company simply responded by developing a scaled-down compliant chip for the Chinese market, cushioning the blow and helping the stock recover.
Fast forward to today, and Nvidia is doing the exact same thing.
Jensen Huang, Nvidia CEO, just confirmed a newly modified chip for China that will be distributed in the upcoming quarter.
Comparing Nvidia’s current stock price action to October 2023, the patterns look quite similar.
The stock consolidated for a few months before resuming its rally driven by strong earnings growth.
It’s very possible the stock is in the middle of something similar today.
New Revenue Opportunities
Nvidia recently announced that it will supply several hundred thousand of its most advanced chips to Humain, an AI startup owned by Saudi Arabia’s Kingdom Investment Fund.
This billion-dollar deal could help Nvidia completely counterbalance the impact of the China export ban.
With AI data center spending projected to reach $1 trillion by 2029, we’ve been very bullish on the semiconductor sector at Bravos Research.
We compare this new and growing industry to the software industry in the early 2000s.
Nvidia remains well-positioned to capitalize on this long-term structural trend.
The Timing Mystery
So why is legendary investor Michael Burry making the exact opposite prediction and betting against Nvidia?
Before jumping to conclusions, we should remember that 13F filings revealing Burry’s positions are slightly lagged.
The filing confirms Burry held a short position as of March 31st, 2025, but doesn’t tell us if he’s still holding that position today.
March 31st was right before Donald Trump announced new tariffs, which triggered an additional 15% decline in Nvidia the following week.
It’s entirely possible that Burry sold his short position during the market panic following the reciprocal tariff announcement on Liberation Day.
In fact, it’s even possible Burry eventually bought the dip on Nvidia during the panic and is actually positioned long on the stock today.
The truth is, we simply don’t know.
The 13F filings don’t provide an outlook granular enough to understand what Burry is doing with his portfolio today.
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