Why Nvidia (NVDA) Is Defending AI Chip Longevity Against Michael Burry’s Criticism

TLDR

• Nvidia stock advanced approximately 3% on Friday, setting a new intraday peak above its May record.
• The chipmaker is responding to skeptics like Michael Burry who question whether AI chip depreciation timelines are overly optimistic.
• Nvidia highlights that Meta and Google have both expanded their server depreciation periods from four to six years.
• The company’s board approved an additional $150 billion share repurchase program, increasing total authorization to $235 billion through fiscal 2028.
• Morgan Stanley named Nvidia its preferred semiconductor stock following discussions with CEO Jensen Huang.

Nvidia (NVDA) stock gained approximately 3% during Friday’s trading session, reaching a new intraday record and surpassing its prior all-time closing peak established in May. Trading activity showed shares hovering around $237.75, continuing a momentum that has delivered a year-to-date gain of roughly 27%.

NVIDIA Corporation, NVDA

The rally was powered by two distinct catalysts occurring simultaneously. First, an intensifying discussion about the actual useful life of AI chips. Second, a massive capital return initiative aimed at rewarding shareholders.

Consider the depreciation controversy first. Michael Burry, the investor famous for forecasting the 2008 financial crisis, has raised concerns that technology giants are being too conservative in estimating how quickly their AI hardware becomes obsolete. Such accounting choices could artificially inflate current earnings figures.

Nvidia isn’t sitting idly by. The semiconductor manufacturer is pointing to evidence from key clients like Meta Platforms and Google, both of whom have extended their AI infrastructure depreciation timeframes from four years to six. This serves as a direct counter to those questioning the industry’s accounting practices.

Why the Buyback Matters

The second catalyst is more transparent. Nvidia’s board approved an incremental $150 billion share repurchase authorization earlier this week. Combined with existing authorizations, the company now has $235 billion available for buybacks extending through fiscal 2028.

This represents the largest share repurchase program ever announced by any corporation. The magnitude sends a clear message: Nvidia’s leadership is confident the company will continue generating substantial cash flow despite heavy investment in AI infrastructure expansion.

The Street responded positively. Morgan Stanley elevated Nvidia to its top semiconductor recommendation on Friday after conducting meetings with CEO Jensen Huang and senior management. The investment bank cited ongoing robust AI demand and an expanding customer ecosystem.

Morgan Stanley also identified an emerging trend deserving attention. The firm suggested that AI infrastructure constraints are transitioning away from semiconductor availability toward data center real estate, electrical power availability, and financing capacity.

This represents an important evolution in the narrative. When chips are no longer the limiting factor, advantage shifts to organizations controlling affordable electricity and strategically located facilities.

The Bigger AI Picture

Nvidia’s moves are occurring within a broader AI investment landscape. The technology sector is increasingly focused on what follows the initial infrastructure buildout phase.

Anthropic’s anticipated public offering is contributing to this momentum. A stock market debut for the company behind Claude would provide another significant benchmark for investor appetite toward AI companies requiring massive capital for scaling operations.

For Nvidia in particular, the dual narrative of historic shareholder returns combined with an active defense against accounting critics provides renewed momentum entering the fourth quarter. Rather than allowing the depreciation discussion to fester quietly, the company has chosen to engage directly.

Nvidia also collaborates extensively with financial institutions to facilitate approximately $500 billion in capital deployment supporting the AI ecosystem, a figure that illustrates the enormous stakes involved in debates over hardware longevity and infrastructure spending patterns.

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