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The warning comes as Michael Burry, the investor who became a household name after predicting the 2008 crash and inspiring the film The Big Short, has made a spectacular $1.5 billion (AU$2.31 billion) bet against Nvidia and fellow AI powerhouse Palantir, sparking fresh concerns about a potential bubble in the booming sector. The head of the US chip giant told the Financial Times that Beijing’s energy subsidies were boosting its drive to build cutting-edge semiconductors used to power AI technology. “China is going to win the AI race,” the British newspaper cited him as saying on Wednesday at an event in London. “As I have long said, China is nanoseconds behind America in AI,” he added in a statement posted on X by Nvidia. “It’s vital that America wins by racing ahead and winning developers worldwide.” The California-based Nvidia last week became the world’s first $5 trillion (AU$7.70 trillion) company, although its market cap has receded since then to around $4.7 trillion (AU$7.24 trillion). Top-end Nvidia chips, used to train and power generative AI systems, are currently not sold in China due to US national security concerns and Chinese government bans. Earlier this week, the White House said it was still not interested in allowing Nvidia to sell its advanced Blackwell chip model in China. The United States has cited the risk of giving China a military advantage as a reason for the block. Huang has repeatedly petitioned Washington to relax its restrictions on Nvidia chip exports, saying that the policy will only help China advance its own technology. The leather jacket-clad businessman also criticised new rules on AI introduced by US states to the Financial Times on Wednesday, contrasting it to China, where the state is subsidising electricity to power the technology. Western countries, including the United States and Britain, are being held back by “cynicism” over AI, he said. Experts say that Chinese chipmakers will struggle to match Nvidia’s tech prowess before the end of the decade. Challenges include building the right software to harness the chips’ power and upgrading its manufacturing tools. Meanwhile, Burry’s move sent shockwaves through Wall Street. Filings show his hedge fund, Scion Asset Management, disclosed put options worth about US$900 million (AU$1.39 billion) against Palantir and US$187 million (AU$288 million) against Nvidia – moves that total more than $1.5 billion in Australian dollars. A put option is a financial bet that pays off if a company’s share price falls. Palantir, the powerful data and AI company with deep ties to US national security bodies, is one of the targets. The other is Nvidia, the biggest company in the world. Burry, who was portrayed by Christian Bale in the 2015 movie The Big Short, is well known for spotting market bubbles and has issued a string of warnings over recent years, some of which haven’t come true. Nevertheless, his latest move is sparking concerns of a bubble in the US stock market created by the AI boom that has seen the value of the ‘Magnificent Seven’ companies in the US skyrocket in recent months. His move sparked an irate reaction from Palantir boss Alex Karp, who said the short sellers were “bats**t crazy” live on CNBC on Tuesday morning. “The two companies he’s shorting are the ones making all the money, which is super weird,” Karp raged on CNBC. “The idea that chips and ontology is what you want to short is bats**t crazy,” he added, referring to Palantir’s data ‘brain’ that links and interprets vast troves of information for its AI systems. He accused short sellers of manipulating the market and said he would be “dancing around” when their bets don’t work out. Burry has not yet spoken about his latest stock market move, but last week he hinted at trouble brewing in a cryptic post on X, writing: “Sometimes, we see bubbles. Sometimes, there is something to do about it. Sometimes, the only winning move is not to play.” “We have seen this movie before,” one analyst said in reference to Burry’s bet and the 2015 film. On the most recent trading day, November 5 US time at the time of writing, Nvidia shares fell 1.75 per cent, closing at $195.21 (AU$300.62), down from the previous session’s close. -With Ben Graham and AFP
