--- title: "\"The Big Short\" prototype warning: NVIDIA is in the same \"dangerous situation\" as Cisco during the internet bubble" type: "News" locale: "en" url: "https://longbridge.com/en/news/277117698.md" description: "Famous American investor Michael Burry warned that NVIDIA is in a \"dangerous position\" due to meeting microchip demand and may face a \"catastrophic\" financial blow. He pointed out that NVIDIA's procurement obligations surged from $16 billion to $95 billion within a year, primarily due to Taiwan Semiconductor's requirement for long-term contracts and cash payments. Burry compared this situation to Cisco during the internet bubble period, emphasizing that NVIDIA's high profit margins may decline due to weak demand" datetime: "2026-02-27T00:01:42.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/277117698.md) - [en](https://longbridge.com/en/news/277117698.md) - [zh-HK](https://longbridge.com/zh-HK/news/277117698.md) --- > Supported Languages: [简体中文](https://longbridge.com/zh-CN/news/277117698.md) | [繁體中文](https://longbridge.com/zh-HK/news/277117698.md) # "The Big Short" prototype warning: NVIDIA is in the same "dangerous situation" as Cisco during the internet bubble Michael Burry, a well-known American investor and the real-life figure behind the movie "The Big Short," stated that NVIDIA has placed itself in a "dangerous position" to meet the anticipated demand for its microchips, and if the artificial intelligence boom fades, the company could face "catastrophic" financial repercussions. Burry published a post titled "NVIDIA Takes on More Risk" on Substack on Thursday, noting that he found a "concerning" item in the company's annual report: its procurement obligations surged from approximately $16 billion to $95 billion within 12 months. Burry indicated that this was due to major supplier Taiwan Semiconductor Manufacturing Company (TSMC) insisting on longer-term contracts and cash payments as a condition for building the capacity needed to meet NVIDIA's latest chip production. "It is important to clarify that NVIDIA was forced to place irrevocable purchase orders without clear demand," Burry wrote, adding that the time required for the company to convert inventory into sales has also increased. "This new reality indicates a deliberate move to lock in supply chain capacity further than ever before." Burry pointed out that NVIDIA's total supply obligations of $117 billion are nearly equal to its annual operating cash flow as of January 25. He wrote, "This is not ordinary. This is a risk." Burry compared this situation to Cisco during the dot-com bubble when the internet networking giant extended its procurement commitments with suppliers to ensure it could support an anticipated 50% annual growth. "When corporate IT spending and data network spending plummeted almost overnight, Cisco wrote down about 40% of its supply chain liabilities and inventory, and its stock price subsequently crashed," he added. Additionally, Burry stated that NVIDIA's high profit margins are partly due to its pricing power stemming from strong product demand, so if demand weakens, margins could decline. He wrote, "Unlike companies that can typically weather industry fluctuations easily, NVIDIA's heavy supply obligations relative to its earnings and cash flow pose a greater potential risk during market downturns." "Once a recession hits, the impact on NVIDIA's earnings and balance sheet will be more severe, potentially catastrophic." ### Related Stocks - [Direxion Daily NVDA Bull 2X Shares (NVDU.US)](https://longbridge.com/en/quote/NVDU.US.md) - [Direxion Daily Semicondct Bull 3X ETF (SOXL.US)](https://longbridge.com/en/quote/SOXL.US.md) - [NVIDIA Corporation (NVDA.US)](https://longbridge.com/en/quote/NVDA.US.md) - [YieldMax NVDA Option Income Strategy ETF (NVDY.US)](https://longbridge.com/en/quote/NVDY.US.md) - [VanEck Semiconductor ETF (SMH.US)](https://longbridge.com/en/quote/SMH.US.md) - [T-REX 2X Long NVIDIA Daily Target ETF (NVDX.US)](https://longbridge.com/en/quote/NVDX.US.md) - [GraniteShares 2x Long NVDA Daily ETF (NVDL.US)](https://longbridge.com/en/quote/NVDL.US.md) - [Cisco Systems, Inc. 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