Michael Burry criticized the financing structure behind Nvidia GPU purchases used by xAI, arguing that complex off-balance-sheet arrangements obscure risk while shifting exposure to investors through private credit markets.
According to Burry, Nvidia sold approximately $5.4 billion worth of GB200 AI chips to a special-purpose vehicle called Valor, which was reportedly created solely to hold the assets. Nvidia also invested roughly $1.9 billion into the structure.
More than 100,000 of the GPUs are reportedly deployed inside xAI data centers and are being used to train and operate the company’s artificial intelligence models.
Burry Questions Off-Balance-Sheet Structure
Burry argues that neither Nvidia nor xAI directly owns the GPUs on paper, with legal ownership residing within the SPV structure.
According to his analysis, the arrangement allows Nvidia to recognize revenue while xAI gains access to computing resources without directly holding the assets on its balance sheet.
He described the structure as a “Fugazi,” suggesting that significant financial risk has been moved away from traditional corporate balance sheets.
The criticism comes as AI infrastructure spending continues to accelerate across the technology sector.
Private Credit and Pension Exposure
Burry also highlighted the role of private credit financing in supporting the transaction.
According to the analysis, Apollo Global Management financed approximately $3.5 billion of the structure, with the exposure ultimately linked to assets held through Athene, Apollo’s insurance business.
Burry argues that portions of the risk may ultimately be borne by retirement and annuity investors through complex investment structures.
The debate reflects growing scrutiny of how AI infrastructure projects are financed as demand for advanced computing capacity reaches unprecedented levels.
The broader takeaway is that the rapid expansion of AI infrastructure is increasingly relying on sophisticated financing arrangements, attracting attention from investors concerned about transparency, leverage, and risk allocation.
