The artificial intelligence craze has driven Nvidia's performance to record highs, and the company has frequently been compared to the Internet bubble and the Enron scandal at the end of the last century. Recently, after Nvidia released a strong quarterly financial report, it had to deny accusations of financial fraud similar to Enron's.
In a memo to Wall Street investors, Nvidia responded to multiple concerns, including mismanagement of its equity, exaggerating the long-term value of its chips, and suspected accounting fraud. Famous investor Michael Burry criticized Nvidia for diluting its capital through stock buybacks and stock compensation. The investor, who became famous in the movie "The Big Short" for betting on the collapse of the U.S. housing market, believes that Nvidia's financial operations are "Enron-style".
At the same time, a CEO named Shanaka Anslem Perera also published an analysis on Substack, claiming that there were algorithmic abnormalities in NVIDIA's financial reports, and directly compared NVIDIA with Enron. Enron used "special purpose entities" to conceal debts and inflate the value of assets, and eventually went bankrupt in 2000.
In response, Nvidia firmly denied the relevant calculations and accusations in a memo to analysts, and stated that the company did not use special purpose entities to hide debts and denied Enron-style financial operations. The relevant memorandum has been confirmed by Barrons and The Verge.
The report mentioned that some of NVIDIA's cooperative "new cloud service providers" such as CoreWeave, Crusoe, Lambda, etc., although they remain independent from NVIDIA, have a business model that helps NVIDIA share risks, and are considered by some analysts to be similar to Enron's "special purpose entities." However, unlike Enron's secret operations, Nvidia's cooperation model is completely open and legal.
Although Nvidia denies all accusations of fraud, there are still concerns about the current "bubble" phenomenon in the artificial intelligence sector. NVIDIA is almost the only company that has made substantial profits due to the AI boom, and other companies have purchased NVIDIA GPUs in hopes of getting a share of the pie in the future. AI has high hopes for improving productivity, but the gap between market valuation and actual performance has widened. Michael Bury has recently closed his hedge fund, saying frankly that the market "confused him."
This incident continues to arouse heated discussions from all walks of life. How Nvidia will respond to the doubts and the future direction of the AI sector still deserve continued attention.