Zaid

So despite beating on every metric across the board, Nvidia stock is down almost 10% following their earnings report.

So let's get into the bear case and why investors are suddenly so nervous about Nvidia going forward.

All right, so if Nvidia is printing money and crushing expectations, why did the stock lose nearly 10% of its value in two days?

Well, the thing is the market is forward-looking and right now investors are getting seriously spooked by a few looming risks when it comes to AI.

I think the market is kind of going through an identity crisis.

On one hand, AI is an incredible technology, and it's getting better every month.

And companies are embracing it and spending hundreds of billions of dollars on it.

But on the other hand, some investors are starting to ask, what if AI being so good is actually bad for the economy?

A few days ago, there was a Substack post by Citrini Research that went mega viral.

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.