[Abridged] The Heretic’s Guide to AI’s Stars Part III: Tracepalooza & the Bezzle
Michael Burry
· Cassandra Unchained
· May 23, 2026 at 00:25
· ⏱ 1 min read
| Read on Substack ↗
Summary
Michael Burry's newsletter analyzes NVIDIA's distorted demand, extreme customer concentration (Microsoft), and massive non-cancellable supply commitments. He warns that the AI training phase is temporary and that the bullwhip effect in supply chains creates significant risk. The article is a thematic critique, not a trade recommendation.
•NVIDIA benefits from strong demand but sells to a concentrated set of buyers whose demand is distorted by a temporary training phase.
•Customer concentration is extreme: a 20% cut in Microsoft's capex on NVDA chips would reduce NVIDIA's revenue by 4.2%.
•NVIDIA has $182 billion in non-cancellable commitments, exceeding its annual operating cash flow, creating financial risk.
•Microsoft's percentage of NVIDIA's accounts receivable rose while its percentage of NVIDIA's revenue fell, indicating potential payment issues.