Michael Burry Says NVIDIA Is Putting your Pension At Risk

Famous hedge-fund investor Michael Burry, who correctly called the 2027-2008 housing finance crisis and rose to fame after being featured in the book and movie The Big Short, is once again critiquing the circular financing deals backing the AI boom, specifically those featuring NVIDIA and OpenAI.

The new issue raised is whether a circular deal with a special purpose vehicle (SPV) to sell 100,000 chips to xAI places undue risk on the financial system. Much of the risk of that deal was offloaded to an offshore insurance company. And in the process, Burry says it's placing the risk in the hands of retirees who may ultimately bear the burden of the risk.

Those are questions emerging from a recent blog posted on Substack by Burry. In the post, Burry reportedly makes several major points to ponder:

· Back in January 2026, Valor Equity Partners, owned by Elon Musk’s close friend and financer Antonio Gracis, opened an SPV named Valor Compute Infrastructure (VCI).

· The SPV raised $5.4 billion through $3.5 billion in debt financing from Apollo Global Management plus $1.9 billion from NVIDIA, which stepped into the deal as an anchor limited partner.

· NVIDIA reportedly declared all $5.4 billion of the chips as revenue. Although the accounting seemed aboveboard, it forced questions about whether NVIDIA paid VCI to buy its chips.

· VCI used the funding to buy 100,000 NVIDIA GB200 GPUs and related gear. These chips were then leased under a triple-net lease structure by a subsidiary of xAI, meaning that the subsidiary is responsible for all maintenance of the equipment. The chips reportedly are being used in xAI’s U.S.-based Grok AI training facilities, including the Colossus supercomputer in Memphis, Tenn.

· Finally, Apollo routed its debt through its Athene insurance subsidiary, following a common tack among private equity firms to reinvest debt in insurers that in turn sell policies and annuities, in part to retirees.

· The majority of Athene’s assets are held by a Bermuda-based insurer that doesn’t come under U.S. financial scrutiny. Hence, this theoretically exposes customers such as retirees with pensions to substantially increased risk.

Is Burry’s Accusation of “Fugazi” Justified?

Some observers aren’t fully convinced by Burry, who calls the NVIDIA/xAI deal “fugazi,” or fake. For instance, “OxSammy” on X, who claims substantial background with major U.S. audit firms, wrote recently:

“The ‘retirees unknowingly carry invisible risk’ packaging is sensationalised. Policyholders hold fixed contractual claims, their exposure is to Athene’s solvency, not directly to GPU residuals.”

Still, OxSammy states that “Burry’s substance is defensible” because NVIDIA’s posting the full $5.4 billion amount for the chips as revenue is questionable:

“If part of your ‘sale’ is funded by capital you re-injected, that portion isn’t a sale. The honest treatment is either net the $1.9bn off the transaction price, or run a ‘variable interest entity’ (VIE) analysis and consolidate VCI. Recognising gross revenue on round-tripped capital is the potential weak [spot].”

By consolidating VCI, NVIDIA would acknowledge that it has control over VCI’s activities and/or is exposed directly to VCI’s gains and losses. If that’s the case, VCI would become a VIE and be absorbed into NVIDIA, eliminating the SPV.

Nothing’s New Here

There’s nothing new about NVIDIA’s supposedly circular deals—investing in CoreWeave, for instance, which provides NVIDIA infrastructure to customers such as OpenAI, in which NVIDIA has also invested. The complex, circular nature of these deals is one of several concerns about NVIDIA raised by investors over the past few months.

NVIDIA CEO Jensen Huang has called these concerns “ridiculous.” NVIDIA didn’t immediately respond to our request for comment on Burry’s blog or the arguments about it.

Clearly, questions will continue to be raised about NVIDIA’s investments and accounting. And underlying it all is the sense of risk that comes from an increasing amount of large deals among hyperscalers, AI labs, neoclouds, and NVIDIA. Still, NVIDIA’s success is solidly entrenched and moving into new areas. The next several quarters will reveal more about the stability of its strategies.

Futuriom Take: Michael Burry’s questions about a big NVIDIA/xAI deal are well founded, but they don’t introduce any new lines of inquiry. Still, the relationships between private equity firms and insurance companies is an important focus for investors.