Michael Burry Warns of Nvidia’s ’Cisco-Like’ Supply Chain Risk Amid AI Boom

Michael Burry's latest Substack analysis draws parallels between Nvidia's current supply chain strategy and Cisco Systems' disastrous overcommitment during the dot-com bubble. Nvidia's purchase obligations surged nearly sixfold to $95.2 billion year-over-year, with total supply commitments reaching $117 billion—roughly matching annual operating cash flow.

CFO Colette Kress confirmed an 8% quarterly inventory increase during Wednesday's earnings call, framing it as strategic preparation for 'beyond several quarters' of demand. Burry interprets this as speculative overreach: 'This isn't temporary disruption—it's a deliberate business plan gamble,' he wrote, suggesting Nvidia is locking in capacity without clear visibility on sustainable AI demand.

The warning evokes Cisco's 2000-2001 collapse, when premature supply chain expansions left the company stranded with obsolete inventory. Burry's analysis implies Nvidia may be repeating history by banking on indefinite AI infrastructure growth.