Michael Burry Just Called Nvidia’s SpaceX Chip Deal ‘Fugazi.’ Here’s Why It All Seems Wrong
Nvidia ( NVDA ) booked $5.4B in revenue from selling GB200 GPUs to Valor Compute Infrastructure, which then leased them to xAI, with Nvidia itself investing $1.9B as an anchor equity partner in the structure, allowing both companies to avoid balance sheet impact while capturing u
Nvidia ( NVDA ) booked $5.4B in revenue from selling GB200 GPUs to Valor Compute Infrastructure, which then leased them to xAI, with Nvidia itself investing $1.9B as an anchor equity partner in the structure, allowing both companies to avoid balance sheet impact while capturing upside. Apollo Global Management (APO) provided $3.5B in debt financing routed through insurance affiliate Athene, which holds $74.2B in U.S. reserves but shifted $217B into a Bermuda captive insurer with 34.7% in Level 3 illiquid assets and 16x leverage, ultimately exposing retail annuity holders to concentrated credit risk.
Michael Burry warns that multi-layered AI infrastructure financing structures, while legal, obscure true economic risks behind complex arrangements similar to Cisco’s dot-com era accounting, as these deals multiply across the AI buildout and could amplify losses if demand weakens or hardware becomes obsolete.
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Investors have watched Nvidia ( NASDAQ:NVDA ) ride the AI wave to extraordinary heights, with data center revenue exploding in recent years. Yet amid the hype, one of Wall Street's sharpest skeptics keeps raising red flags about its financing arrangements.
Michael Burry, the investor who foresaw the 2008 housing crisis, took to his Cassandra Unchained Substack and X to label a major Nvidia chip transaction with xAI "fugazi" -- his term for something fake or contrived.
But is it as much of a concern as Burry contends, or much ado about nothing?
The analyst who called NVIDIA in 2010 just named his top 10 stocks . Get them here FREE .
In January 2026, Valor Equity Partners -- a longtime backer of Elon Musk’s ventures -- raised $5.4 billion through a new entity called Valor Compute Infrastructure (VCI). The money funded the purchase of thousands of Nvidia’s powerful GB200 GPUs plus supporting data center equipment. These chips were then leased, under a triple-net lease structure, to a subsidiary of Elon Musk’s xAI for training its Grok AI models at one of the world’s most powerful compute clusters.
