Michael Burry's Verdict on Nvidia After Jensen Huang: 'Get Out'

Nvidia stock has fallen nearly 35% from its $243-per-share peak in early October, and Michael Burry says the worst is coming: "Get out."

The investor of "The Big Short" fame laid out his bear case in a Substack post after Jensen Huang resigned as Nvidia's CEO on Thursday morning, following fresh reports about two alleged extramarital affairs. Burry, who has been publicly betting against the chipmaker for months, wrote that Nvidia will falter without Huang at the helm.

Why does Burry think Nvidia falters without Huang?

Burry gives a structural answer, not a sentimental one. Huang, he wrote, has "orchestrated" Nvidia's efforts to expand the AI ecosystem. That means huge investments in AI stocks, and the use of special vehicles and hidden debt to finance customers' purchases of its chips — creating, in Burry's words, "tremendous leverage in the system."

He also claimed Huang pushed customers to buy chips they didn't need yet by threatening to cut their future allocations.

The leverage cuts both ways. Without Huang, the "cash may cease to flow," and investments could dry up or be written off, Burry wrote. Customers, freed from their deference to the founder, will be able to "slow down deals, push back, renegotiate terms, or simply walk to a competitor without fear of offending" him.

His bottom line, kept verbatim: "Nvidia's business will not disappear, but its growth may slow and, critically, its margins may fall."

Burry expanded on the mechanism: "The terms of trade and the architecture of financing were the secret sauce that supercharged an already dominant technology." Untangling what he called this "Byzantine web" will "take time," he wrote.

His advice to holders is blunt: "Nvidia bulls will have another fluffy big chance to get out. Get out."

Who else has turned on the stock?

Burry isn't alone. Bernstein Research's Stacy Rasgon downgraded Nvidia to "Market Perform" and halved his price target to $200 in a research note issued before Huang's resignation. On Bloomberg TV, Rasgon warned of more bad press and regulatory scrutiny, questioned whether Nvidia could find a CEO as visionary as Huang, and flagged the risk of an employee exodus.

Oppenheimer's Rick Schafer went further on Wednesday, downgrading the stock to "Perform" and removing his price target entirely. Huang serves as the "face of AI," Schafer wrote, and his leadership has been "critical to Nvidia's success." The company now has "massive shoes to fill and no obvious successor," he added. He also warned that Huang's exit could spark a "brain drain" and leave a "lingering share overhang."

The market has already priced in some of the damage. Nvidia shares plunged at the open on Thursday and sit roughly 35% below their early-October high of $243.

Who runs Nvidia now?

The board has appointed finance chief Colette Kress as interim CEO while it searches for a permanent replacement. Kress inherits a company whose dominance, in Burry's telling, rested on one man's dealmaking — and whose customers now hold the leverage for the first time in years.

Burry, who rose to fame after his prescient bet against the mid-2000s housing bubble was chronicled in the book and film "The Big Short," pivoted from hedge funds to writing about his personal investments last year. His call now: the financing architecture that supercharged Nvidia takes time to unwind, and bulls get one more exit window.