This article first appeared on GuruFocus.
Michael Burry (Trades, Portfolio) disclosed a short-term options hedge tied to Nvidia (NASDAQ:NVDA), while questioning whether its valuation reflects longer-term risks.
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In an Aug. 26 Substack post, Burry said he purchased December call options with strike prices in the mid-to-high $200s, paying single-digit premiums. He described the trade as protection against his larger bearish positions in the stock.
The disclosure followed Nvidia's latest quarterly results, which exceeded Wall Street estimates. The company also provided a long-term outlook calling for roughly 70% growth through fiscal 2028.
Burry argued that Nvidia's recent post-earnings trading pattern has been weaker than its gains and said its current valuation does not align with the prevailing market view.
He also estimated the company's intrinsic value below its current market value and raised concerns about future shareholder distributions and potential pressure on earnings as AI investment expands.
Nvidia's earnings-driven rally may face a debate over whether its growth outlook can justify current valuation levels.