'Get out' of Nvidia stock, Michael Burry says
Michael Burry from "The Big Short" says Jensen Huang's departure as CEO could slow Nvidia's growth and shrink its profit margins.
Nvidia's CEO Jensen Huang stepped down on Thursday following reports of marital infidelity, causing Michael Burry, the investor behind The Big Short, to warn investors to sell their shares before the company's decline. Burry, who has been publicly betting against Nvidia for months, stated that Huang's departure would significantly impact the AI chipmaker's growth and profit margins.
The AI specialist emphasized that Huang orchestrated Nvidia's expansion of the AI ecosystem, leveraged investments in AI stocks, and used special vehicles and hidden debt to finance customers' chip purchases, creating substantial leverage. Without Huang, Burry argued, Nvidia's cash flow may cease, investments could dry up or be written off, and customers might slow down deals, renegotiate terms, or leave for competitors.
The CEO's resignation could lead to a slowdown in Nvidia's growth and a fall in profit margins. Burry suggested that Nvidia bulls should consider exiting their positions, as the company's stock experienced a nearly 35% drop from its October peak after the resignation news.
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