This article first appeared on GuruFocus.
A leading chip manufacturer (NASDAQ:NVDA) issued a detailed memo to analysts pushing back against accounting criticisms raised by investor Michael Burry (Trades, Portfolio).
Burry has questioned financial practices across major AI developers, arguing that stock-based compensation, buyback accounting and depreciation methods may distort reported profitability. He also compared current AI-sector reporting to past corporate scandals and suggested some firms rely on cash flows that appear circular.
The company said Burry’s figures were based on misinterpretations. It noted that stock repurchases since 2018 total $91 billion, not the larger amount he cited, because tax-related RSU entries are not part of the buyback program. It added that employee equity awards benefited from share-price appreciation but were not unusually large when granted.
The memo also discussed depreciation, in which the majority of people note the usage of the GPUs of the likes of four to six years, which presents the actual lifespan of the hardware in the real world. Even older processors, such as those of 2020, continue to sell after shorter timescales, the critics criticize.
The company further said strategic investments represent a small share of revenue and that portfolio firms primarily serve outside customers.
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