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Michael Burry, the hedge fund manager who famously predicted the 2008 financial crisis, just delivered a scathing analysis of Nvidia Corp. (NASDAQ:<\/a>NVDA<\/a>) that challenges the AI darling\u2019s reputation as a shareholder-friendly company\u2014and his numbers tell a story Wall Street might prefer to ignore.<\/p>\n In a recent<\/a> post on X, Burry dissected Nvidia’s financials from 2018 through mid-2025, revealing what he sees as a fundamental disconnect between the chipmaker\u2019s impressive earnings and what actually landed in shareholders\u2019 pockets. The critique centers on a practice that\u2019s become endemic across Big Tech: using stock-based compensation to offset share buybacks, effectively canceling out what should benefit existing investors.<\/p>\n Don’t Miss:<\/p>\n According to Burry\u2019s analysis, Nvidia<\/a> generated $205 billion in cumulative net income and $188 billion in free cash flow during the period examined. The company also executed $112.5 billion in share buybacks\u2014an aggressive capital return program by any standard.<\/p>\n But here\u2019s where it gets uncomfortable: Nvidia simultaneously issued $20.5 billion worth of stock-based compensation to employees. When valued at grant prices, Burry said this dilution offset the entire $112.5 billion buyback effort, increasing shares outstanding by 47 million despite the massive repurchase program.<\/p>\n The figures align with Nvidia’s reported data. Annual stock-based compensation climbed from $1.3 billion in 2018 to $4.7 billion in fiscal year 2025 as the company ramped hiring during the AI boom. Share repurchases accelerated dramatically post-2023 as profits surged, yet diluted shares grew anyway due to equity grants issued when the stock was skyrocketing.<\/p>\n Trending: GM-Backed EnergyX Is Solving the Lithium Supply Crisis \u2014 Invest Before They Scale Global Production<\/a><\/p>\n Burry\u2019s critique underscores a tension that value-oriented investors have long harbored about technology giants: the reliance on dilutive compensation to attract talent during growth phases can quietly erode per-share economics even as headline earnings soar.<\/p>\n By Burry\u2019s math, this dynamic reduced Nvidia’s per-share earnings by roughly 50% compared to what they would have been without the offsetting dilution. In other words, if you owned one percent of Nvidia in 2018, you effectively own a smaller slice of a much bigger pie today\u2014despite the company spending over $100 billion on buybacks theoretically designed to increase your ownership stake.<\/p>\n This isn\u2019t illegal or even uncommon. Stock-based compensation has become the standard currency for recruiting top engineering talent in Silicon Valley<\/a>, particularly during periods of explosive growth like Nvidia’s AI-driven expansion. Companies argue it aligns employee incentives with shareholder returns while preserving cash for reinvestment.<\/p>\n See Also: Wall Street’s $12B Real Estate Manager Is Opening Its Doors to Individual Investors \u2014 Without the Crowdfunding Middlemen<\/a><\/p>\n What makes Burry\u2019s analysis particularly relevant now is the broader debate about whether AI-era tech valuations properly account for ongoing dilution. As companies race to hire the best machine learning researchers and chip designers, equity grants have ballooned\u2014often issued when stock prices are at or near all-time highs.<\/p>\n For Nvidia shareholders, the question isn\u2019t whether the company has executed brilliantly on its AI strategy. Clearly it has, with revenue and profits reaching levels few could have imagined in 2018. The question is whether the market has fully priced in the fact that those gains are being shared with a constantly expanding pool of stakeholders.<\/p>\n Burry\u2019s post doesn\u2019t offer investment advice or a price target. But it does what value investors do best: force uncomfortable questions about whether reported earnings translate to actual per-share wealth creation\u2014or just look good in headlines while dilution quietly redistributes the gains.<\/p>\n Read Next: Bill Gates Invests Billions in Green Tech \u2014 This Tree-Free Material Could Be the Next Big Breakthrough<\/a><\/p>\n Image: Midjourney<\/p>\n This article ‘Big Short’ Investor Michael Burry Just Torched Nvidia’s Buyback Strategy\u2014And the Math Is Uncomfortable For Shareholders<\/a> originally appeared on Benzinga.com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below. Michael…\n","protected":false},"author":2,"featured_media":309795,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[69028,10847,45,49,48,127175,6494,138443,138441,138442],"class_list":["post-309794","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-2008-financial-crisis","tag-big-tech","tag-business","tag-ca","tag-canada","tag-michael-burry","tag-nvidia","tag-scathing-analysis","tag-share-buybacks","tag-stock-based-compensation"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/309794","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=309794"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/309794\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/309795"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=309794"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=309794"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=309794"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}