Nvidia's $150 Billion Taiwan Bet Meets Burry's Bearish Challenge: Record Earnings and Rising Scrutiny Collide
Published on 05/28/2026 at 10:13 | Redaktion boerse-global.de
Nvidia's first-quarter results were nothing short of staggering: revenue of $81.6 billion, up 85% from a year ago, free cash flow of $48.6 billion, and guidance for another $91 billion in the current quarter. Yet the stock barely flinched, slipping about 1.5% after hours and another 4.3% in the following week. That muted reaction reflects a market that is wrestling with two powerful narratives pulling in opposite directions—one of explosive growth and massive strategic investment, the other of mounting skepticism from a legendary short seller and fresh geopolitical friction.
On May 26, Michael Burry fired his latest salvo at the AI chipmaker via a Substack post reaching more than 200,000 subscribers. He doubled down on his bearish thesis, arguing that conditions for an aggressive share-price decline are as strong as they have been in the stock's history. He pointed to past drawdowns—56% in 2018, 67% in 2021, and 43% last year—as evidence that Nvidia can turn brutal. His central comparison? Cisco at the height of the dot-com bubble: a powerful present, but expectations stretched too far for a permanently linear future. Nvidia responded by sending a memo to analysts at major banks, refuting Burry's arguments on stock-based compensation and depreciation—an unusual step that underscores how seriously the debate is being taken inside the company.
The very next day, CEO Jensen Huang was in Taipei unveiling a different kind of challenge. He announced an extraordinary investment of $150 billion annually in Taiwan, promising to turn the island into the "epicenter of the AI revolution." The new Taiwan headquarters, dubbed "Nvidia Constellation," will span roughly 700,000 square meters in the Beitou-Shilin Science Park, with construction set to begin this year and completion targeted for 2030. The local workforce will quadruple from 1,000 to 4,000, deepening ties with partners TSMC, Foxconn, Wistron, and Quanta. According to industry data, Nvidia is poised to overtake Apple as TSMC's largest customer by order volume.
Burry's attack, meanwhile, zeroes in on the quality of that demand. He argues that a significant chunk of the AI boom is being driven by benchmarking, data collection, and exorbitant token consumption—demand he considers less durable than the market is pricing in. Customer concentration adds another layer of risk: top three clients accounted for 64% of receivables, up from 56% in the prior quarter. And he highlights $119 billion in non-cancellable supply commitments to TSMC, placing that figure alongside $662 billion in off-balance-sheet obligations at five major hyperscalers—Microsoft, Amazon, Alphabet, Meta, and Oracle. In a stress scenario, such commitments could tighten unexpectedly fast.
Should investors sell immediately? Or is it worth buying Nvidia?
Nvidia's own actions suggest the company sees few near-term clouds. The board approved an $80 billion share buyback program and raised the quarterly dividend to $0.25 a share, a 25-fold increase. Free cash flow of $48.6 billion provides ample firepower. The next-generation Vera Rubin architecture is slated for initial shipments from the third quarter. Analysts remain predominantly bullish: 39 out of 41 rate the stock a "Strong Buy," with one hold and one sell. Rothschild & Co Redburn lifted its price target to $300, and Tigress Financial went to $425, citing "parabolic" demand for AI infrastructure.
Yet even as the financial spigot opens wider, a legal case in Taiwan is exposing the vulnerability of Nvidia's export controls. Prosecutors are investigating three individuals suspected of smuggling at least one shipment of Nvidia AI chips to China via Japan, using forged export documents for Super Micro servers. Huang, who traveled to Taipei immediately after the raids, said Super Micro needs to improve its compliance. The timing is delicate: revenue from China and Hong Kong halved in the latest quarter, while Taiwan surged more than 50%. Export controls are no longer a peripheral issue—they are baked into the growth math.
On the software side, Nvidia is quietly closing a chapter: with driver update 610.47 WHQL, released on the same day as Burry's post, the company began retiring the classic Nvidia Control Panel after two decades. All functions migrate to the central Nvidia App, which will now handle 3D settings, overclocking, and RTX features. The old panel remains available in the Microsoft Store but will receive no further updates.
Nvidia at a turning point? This analysis reveals what investors need to know now.
The stock trades at around $213 in New York, roughly 10% below its all-time high of $236.54, and in Frankfurt at €181.78. Year to date the gain stands at 12.84%, with a 52.17% advance over the past 12 months. That is a far cry from the triple-digit rallies of previous years, and Burry senses opportunity. His Cisco comparison is gaining traction in some corners, but for now the wall of buy ratings and the unbroken demand from hyperscalers keep the bears outnumbered. The real test will come if Nvidia's $91 billion revenue target stumbles—or if the smuggling case in Taiwan heralds a wider crackdown that chokes off growth in the world's largest chip market.
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