'Big Short' Investor Michael Burry Just Torched Nvidia's Buyback Strategy—And the Math Is Uncomfortable For Shareholders

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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:NVDA) that challenges the AI darling’s reputation as a shareholder-friendly company—and his numbers tell a story Wall Street might prefer to ignore.

In a recent post on X, Burry dissected Nvidia's financials from 2018 through mid-2025, revealing what he sees as a fundamental disconnect between the chipmaker’s impressive earnings and what actually landed in shareholders’ pockets. The critique centers on a practice that’s become endemic across Big Tech: using stock-based compensation to offset share buybacks, effectively canceling out what should benefit existing investors.

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The Dilution Shell Game

According to Burry’s analysis, Nvidia 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—an aggressive capital return program by any standard.

But here’s 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.

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.

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Why This Matters for Value Investors

Burry’s 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.

By Burry’s 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—despite the company spending over $100 billion on buybacks theoretically designed to increase your ownership stake.

This isn’t illegal or even uncommon. Stock-based compensation has become the standard currency for recruiting top engineering talent in Silicon Valley, 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.

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The Bigger Question About Tech Valuations

What makes Burry’s 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—often issued when stock prices are at or near all-time highs.

For Nvidia shareholders, the question isn’t 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.

Burry’s post doesn’t 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—or just look good in headlines while dilution quietly redistributes the gains.

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This article 'Big Short' Investor Michael Burry Just Torched Nvidia's Buyback Strategy—And the Math Is Uncomfortable For Shareholders originally appeared on Benzinga.com