Zaid

The post was framed as a research memo from the year 2028, and it laid out a completely dystopian view of AI's economic impact.

The whole piece was very long, like 7,000 words.

And it essentially makes the point that AI will keep getting better and companies will keep replacing white collar workers with AI and those displaced workers will stop spending money and that's gonna trigger a broader economic collapse.

Now, personally, I think the Citrini piece is a bit too sci-fi for me to take seriously, but the markets definitely took notice.

Tech stocks fell on Monday following the report, and that just tells you how fragile sentiment is around AI right now.

We saw something similar happen with DeepSeek back in January of last year when that Chinese AI startup shocked the market and Nvidia's stock dropped 17% in a single day.

So the AI narrative can turn on a dime and because Nvidia is so tied to the AI narrative, any shift in the sentiment hits Nvidia stock pretty hard.

Now beyond the AI sentiment, famous short seller Michael Burry is also getting in on the action.

He published a negative piece about Nvidia following their earnings report.

Michael Burry pointed to Nvidia's purchase obligations going from $16 billion a year ago to over $95 billion today.

These purchase obligations are non-cancellable commitments that Nvidia has to make to their suppliers like TSMC to secure chip production capacity.

And it looks like Nvidia has already committed pretty much all their free cash flow on this capacity.

The point that Burry is trying to make is Nvidia is being forced to place these massive orders well before they actually know what demand will look like.

Now TSMC is requiring these longer term contracts because Nvidia chips have gotten so complex that TSMC has to build custom fabrication capacity just for Nvidia.

So essentially Nvidia is placing huge bets on future demand without knowing if that demand will be there.

Burry compares this to what happened with Cisco back in the dot-com bubble.

Cisco was the picks and shovels play of the late 90s internet boom, just like Nvidia is for AI today.

At the time, Cisco extended massive purchase commitments, expecting 50% annual growth to continue.

Well, when enterprise IT spending collapsed, Cisco had to write down about 40% of its supply chain obligations and Cisco's stock tank.

So I think Burry thinks that could also happen to Nvidia.