As part of his latest stage of increasing short positions against stocks involved in the artificial intelligence (AI) ‘boom,’ Michael Burry drew a stark comparison when he claimed there were ‘echoes of Enron’ in Nvidia’s (NASDAQ: NVDA) recent moves.
Specifically, in a recent Substack post, the legendary investor referenced the former energy giant’s efforts to hide its vast debt when he opined that a recent $500 billion scheme to fund AI infrastructure was little more than ‘a marketing stunt.’
Indeed, according to Burry, the supposed deal with a long list of major financial institutions is meant to distract from the rising costs of insuring Nvidia’s debt, while also noting it was akin to ‘Enron’s effort to make wholesale power an investable class.’
The title of Jensen Huang’s X article on the matter is titled ‘NVIDIA AI Factory Compute Is Becoming an Investable Asset Class,’ making the comparison easy to make.
Simultaneously, Michael Burry reflected on why the latest developments concern him by adding that:
Structuring credit is a natural part of the system. Structuring unnatural credits to prolong momentum late in the bull phase is where the worry comes in. The marketing spin here is that it would be un-American to oppose more leverage.
Notably, however, Burry also deleted an X post in which he shared a Telegraph article covering his comparisons with Enron sometime between August 13 and August 14.
Why Nvidia has been unable to escape Enron comparisons
Elsewhere, while Nvidia’s business appears significantly different than Enron’s and no clear proof of what might be described as fraud emerged, the semiconductor giant has been plagued with similar comparisons for years.
A key – and vehemently denied – reason for the suspicion has been what appears to be rampant circular financing. So far, Nvidia has invested billions in various companies involved with AI that have then turned into the chipmaker’s customers.
Furthermore, many of said buyers are themselves relatively new companies that benefit from funds designed for startups, but that then effectively forward the money they received to the semiconductor giant either directly or via cloud providers who also get their hardware from the world’s largest company.
Another accusation has been that Nvidia is evading U.S. export restrictions to the People’s Republic of China using various Asian intermediaries, with Singapore being an alleged hub for the activity. No clear proof of the supposed activity has emerged by press time on August 14.
Does the latest Nvidia $500 initiative address circular financing allegations?
Meanwhile, though Nvidia has generally refrained from reflecting on the Enron comparisons since penning the ‘We are not Enron’ memo, the recent AI infrastructure agreement was explicitly made to alleviate the circular financing criticism:
Is this circular financing? This initiative is designed to address that concern. We are bringing independent, long-term institutional capital into the AI infrastructure market.
Additionally, the ‘strategic partnership’ came with its own caveat, as it is in the form of ‘memorandums of understanding’ (MoU) with six other firms that are, as the disclaimer at the end of the chipmaker’s press release states, ‘subject to execution of the final agreements.’
In the second half (H2) of 2025, Nvidia signed an MoU with OpenAI that was widely reported as a $100 billion investment in the most prominent AI company in the world. That particular investment never materialized and was replaced by a different, substantially smaller agreement.
