NVIDIA (NVDA) Buyback Critique by Michael Burry: Market Impact & Risk Analysis

On November 21, 2025 (14:01 EST), investor Michael Burry criticized NVIDIA’s $112.5 billion in stock buybacks from 2018–2025, claiming they offset stock-based compensation (SBC) dilution without adding net shareholder value. Burry noted NVIDIA’s share count increased by 47 million despite the buybacks, arguing the true cost of SBC was $112.5 billion (reducing owner earnings by 50%)—far higher than the reported $20.5 billion [1][2].

NVIDIA’s stock reacted negatively to Burry’s comments:

• Short-term price movement
  : On November 21, NVDA closed at $178.88 (down 1.3% day-on-day) with an intraday low of $172.94 (post-event), following a 7.81% drop the previous day [0].
• Sentiment split
  : The two-day decline reflects negative investor reaction, but Wall Street analysts maintain a bullish consensus (see Section 3) [0].

• Buyback vs. SBC
  : Burry’s critique highlights a disconnect between $112.5B in buybacks and rising share count [1][2]. NVIDIA’s quarterly buybacks have surged in recent years (e.g., $9.6B in Q3 2025) [3].
• Financial metrics
  :
  • Market cap: $4.36 trillion [0]
  • P/E ratio: 43.87x (high valuation) [0]
  • ROE: 1.04% (surprisingly low for a tech leader, indicating potential equity inefficiency) [0]
  • Net profit margin: 53.01% (strong, but not translating to high ROE) [0]
• Analyst consensus
  : BUY rating with a $250 target price (39.8% upside from current levels) [0].

• Direct
  : NVIDIA Corporation (NVDA) stock.
• Related sectors
  : Semiconductors, AI, and data center industries (NVIDIA dominates these markets).

• Information gaps
  :
  1. Verify Burry’s share count claim with NVIDIA’s official filings.
  2. Seek NVIDIA’s public response to Burry’s critique.
  3. Analyze ROE components (asset turnover, equity multiplier) to explain low ROE.
  4. Review detailed SBC/buyback data (2018–2025) to confirm offsetting effects.
• Multi-perspective view
  : Burry’s bearish stance conflicts with Wall Street’s bullish outlook—investors must balance both views against their risk tolerance.
• Key monitoring points
  :
  • NVIDIA’s response to Burry.
  • Upcoming earnings reports (track ROE trends).
  • Regulatory developments (e.g., chip export controls from recent smuggling case [4]).

1. Capital allocation risk
   : Burry’s claim that buybacks offset SBC without adding value may erode investor confidence. Users should be aware this could increase NVDA’s volatility if more investors align with Burry’s view [1][2].
2. Low ROE concern
   : The 1.04% ROE is well below tech industry averages, raising questions about equity efficiency. This warrants careful consideration for long-term investors [0].
3. Valuation risk
   : The 43.87x P/E ratio makes NVDA vulnerable to downward pressure if earnings slow or negative news gains traction [0].
4. Regulatory risk
   : Recent U.S. charges for smuggling NVIDIA chips to China could lead to stricter export controls, impacting international revenue [4].