Weekend private letter “refutes” the “big short” point by point, and a Tuesday post “proves” itself ahead of Google—Is Nvidia getting nervous?

Nvidia is responding to dual pressures from market competition and short-selling rhetoric with a series of rare public and private actions. However, these defensive measures have not quelled investors’ concerns and have instead exposed the giant’s insecurity. On Tuesday Eastern Time, after the stock plunged more than 7% intraday, Nvidia posted a rare statement on social media platform X, publicly declaring its GPU technology “a generation ahead of the industry,” directly countering worries that its dominance might be challenged by Google. Nvidia’s stock ultimately closed down about 2.6% that day, hitting its lowest close in over two months, while its rival Alphabet, Google’s parent company, rose against the market by 1.6%, marking a third consecutive record high and pushing its market value close to $4 trillion. (Comparison between Nvidia and Google’s stock performance over the past five days) Previously, over the weekend, Nvidia secretly distributed a seven-page memorandum to Wall Street analysts. According to reports from The Wall Street Journal and other media, the document was aimed at refuting, point-by-point, accusations such as accounting fraud, circular financing, and an AI bubble, as raised by critics including Michael Burry—the real-life figure portrayed in the film “The Big Short.” However, the series of urgent communications appears not to have achieved the intended effect. Some analysts have pointed out that these actions have instead made Nvidia seem “at a loss.” A giant at the top of the industry should not need to respond to every piece of market noise; its unusual reaction is being interpreted as a signal of inner anxiety. Behind this impression of being “at a loss” is the immense pressure Nvidia is facing. As Wallstreetcn previously noted, CEO Jensen Huang admitted in an internal meeting last week that the company is in a “no-win situation”: if performance is strong, it will be accused of fueling an AI bubble; if it's weak, it’s seen as proof of the bubble bursting. Tuesday’s Public Callout: “We’re a Generation Ahead of Google” As Wallstreetcn previously noted, Nvidia’s statement on X was widely viewed as a direct response to major news: prior media reports said Nvidia’s key customer Meta was considering large-scale adoption of Google’s self-developed AI chips—Tensor Processing Units (TPUs)—at its data centers. “We are happy to see Google’s achievements,” wrote Nvidia in its post, “Nvidia is currently a generation ahead of the industry—we are the only platform capable of running all AI models and being universal across computing scenarios.” The company emphasized that its GPUs, compared to Google’s TPUs, which are specialized ASIC chips, offer “higher performance, greater versatility, and interchangeability.” Google’s TPUs pose a direct challenge to Nvidia’s market share of over 90% in the AI chip sector. The market worries that if “hyperscale” clients like Meta begin shifting towards Google, it would signal a breach in Nvidia’s once-impenetrable moat. A Google spokesperson stated that demand for both its custom TPUs and Nvidia GPUs is accelerating, and that they would continue to support both. This response underscores big tech firms’ strategy of diversifying supply sources for AI infrastructure—precisely the trend Nvidia investors fear most. The Secret Weekend Memo: Point-by-Point Rebuttal to “The Big Short” Before publicly responding to competitive threats, Nvidia had acted privately to address another storm. Noted investor Michael Burry recently published a series of articles likening the current AI boom to the late-90s internet bubble, and comparing Nvidia to Cisco, whose stock plummeted after that bubble burst. Burry’s key arguments include claims that tech giants artificially inflate profits by extending the depreciation period for AI chips, warnings of a catastrophic “supply-side glut,” and suspicions about Nvidia’s involvement in “circular financing.” According to CNBC and The Wall Street Journal, Nvidia’s memo distributed to analysts provided detailed rebuttals to these allegations. The memo clearly mentioned Michael Burry and clarified core points: - Accounting Practices: Nvidia emphasized in the document, “Nvidia is not similar to historical accounting fraud cases, as our core business is economically sound and our reporting is complete and transparent.” The company stated it does not use special purpose vehicles (SPVs) for financing. - Equipment Depreciation: In response to Burry’s claim that the actual lifespan of AI chips is only two to three years, Nvidia said that its clients typically set GPU depreciation periods at four to six years, consistent with the hardware’s actual service life and usage patterns. The company noted that even older models like the 2020 A100 GPU are still being run at high utilization rates. - Circular Financing: Addressing rumors of massive circular financing, Nvidia clarified that its strategic investments in Q3 amounted to only $3.7 billion, a small portion of revenue. The startups it invests in primarily raise funds from third parties, so allegations of circular financing are unfounded. Market Reaction: The Giant’s Moves Seen as “At a Loss” Though Nvidia tried to dispel doubts with thorough explanations, its approach to communication raised new concerns. D.A. Davidson analyst Gil Luria noted that the memo might have backfired. “This memo itself makes Nvidia look very defensive—while not sharing it publicly makes things seem even worse,” Luria commented. “We agree with many of the responses provided, but a company of this size shouldn’t need to respond to every question outside of earnings periods.” The market echoed this view. Analysts suggest that a confident leader typically lets performance and products speak for themselves, rather than rushing to justify accusations. Nvidia’s reactive moves have instead “touched upon existing fears” about run-away AI investment, escalating competition, and the specter of circular financing. Dan Morgan, Senior Portfolio Manager at Synovus Trust, commented: “Google has considerable strength—they’re not just a supporting player on the sidelines.” Google’s most advanced AI model Gemini 3 is trained entirely on its own TPUs, and leading AI firm Anthropic’s large-scale adoption of TPUs further validates their viability as alternatives to Nvidia products. Although Nvidia CEO Jensen Huang insisted at the earnings call that he does “not see an AI bubble,” the company’s series of unexpected communications, combined with the market’s sensitivity to changes in the competitive landscape, seem to point to one conclusion: the throne of AI king may not be as stable as once imagined. Risk Warning and Disclaimer The market comes with risks; investors should be cautious. This article does not constitute individual investment advice and does not take into account any specific user’s investment objectives, financial situation, or needs. Readers should consider whether any opinions, views, or conclusions in this article suit their particular circumstances. Investment decisions made accordingly are at one’s own risk.