While most analysts and investors were focused on Oracle’s (NYSE: ORCL) impressive earnings report and its subsequent extended session rally, the legendary short trader Michael Burry reflected on how Nvidia (NASDAQ: NVDA) might have recently engaged in foul play regarding the cloud company.
Oracle stock price one-day chart. Source: FinboldSpecifically, the ‘Big Short’ investor highlighted that an agreement to construct a major Texas data center as part of the Stargate project between OpenAI and Oracle might have collapsed due to Sam Altman’s company trying to secure the upcoming Vera Rubin chips rather than the older Blackwell infrastructure.
Why Michael Burry is warning that Nvidia ‘is mafia-like’
Furthermore, Michael Burry noted that, after the deal fell through and Meta Platforms took advantage of the fallout and took over, Nvidia appears to have stepped in with a $150 million payment to prevent its competitor, Advanced Micro Devices (NASDAQ: AMD), from getting a chance at getting involved.
‘The Big Short’ trader opined that such a move from the world’s biggest semiconductor company amounts to ‘mafia-like’ behavior and added that it ‘should be an antitrust case.’
Michael Burry also noted that Nvidia is unlikely to suffer any consequences from the alleged foul play, as he does not believe that President Donald Trump’s Administration has an interest in cracking down on corporate machinations:
Could the Texas data center troubles jeopardize Oracle?
Elsewhere, Michael Burry voiced a divergent opinion regarding the data center turmoil from most other observers who have, according to the legendary short trader, declared it is ‘no big deal.’
Indeed, the ‘Big Short’ investor believes that the shifting plans regarding the Texas facility constitute a significant risk for Oracle as the cloud company borrowed heavily to finance the Blackwell-based data centers, which are now falling out of fashion.
Throughout 2024 and 2025, the Blackwell chips were a major narrative for Nvidia, with CEO Jensen Huang’s claims that the demand for them was ‘insane’ being a substantial driver of growth.
Apparently, OpenAI already considers the infrastructure outdated as the industry is moving toward the upcoming Vera Rubin.
Does the Texas data center turmoil signal end of AI boom?
Considering the extreme lack of profitability and burn rate of artificial intelligence (AI) companies, many critics of the current state of big tech have been warning for years that the massive data center deals made at any given point are likely to amount to little more than shoveling money into the furnace due to the short shelf life of the hardware.
As for Michael Burry’s take, he considers the turbulent events surrounding the planned OpenAI-Oracle Texas facility and Nvidia’s stepping in to block AMD from a potentially lucrative contract a ‘huge deal’:
Interestingly, the popular technology journalist and AI critic Ed Zitron has also been repeatedly warning that Oracle is, as a company, in danger due to its vast commitments and lack of a clear road to profitability.
Why Nvidia might soon face its biggest challenge ever
As for Nvidia, even though Michael Burry is likely right – based on the first year of the presidency – that there will be no legal fallout for the alleged ‘mafia-like’ behavior, the company might soon begin losing its ability to dominate the sector.
Between its own national ambitions and restrictions imposed by different U.S. Presidents, China has been working to build its own semiconductor industry to parity with Western competitors.
The most recent example that the country’s companies might be catching up in earnest came in the form of Lisuan Technology’s G100 series graphics cards, which are, allegedly, comparable to Nvidia’s RTX 4060 at least.
While a widespread adoption of Chinese chips is likely years away, it is increasingly likely that the decades-old triumvirate of broadly western companies – Nvidia, AMD, and Intel (NASDAQ: INTC) – might be nearing its end.
Indeed, Nvidia’s own decision to partially withdraw from the consumer market due to the chain reaction arguably started by OpenAI and leading to the 2026 ‘RAMaggedon’ might help accelerate the growth of Chinese competition in the industry.
Source: https://finbold.com/big-short-michael-burry-warns-nvidia-is-mafia-like/
