Deepti Sri
6 min read
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Burry thinks Nvidia could soon offer “a heck of a trade,” though he sees its competitive edge weakening over the next five years.
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He bought more MercadoLibre below $1,500 twice recently and plans to buy again if it drops another 20%.
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He also bought more Adobe and JD.com, saying buybacks should support Adobe and calling JD “forgotten and far too cheap.”
Nvidia’s recent selloff has caught Michael Burry’s attention, but he is not rushing to make any long-term holdings. While “The Big Short” investor said Nvidia (NVDA) could soon look like “a heck of a trade,” he still expects its competitive advantage to erode over the next five years. On the other hand, Burry’s latest portfolio commentary revealed MercadoLibre (MELI) and Australian furniture retailer Temple & Webster as his two largest positions.
Each accounts for more than 10% of his portfolio, Burry said in his Cassandra Unchained post late Tuesday. He added to MercadoLibre, Adobe (ADBE), JD.com (JD) and long-dated Sprouts Farmers Market (SFM) call options.
NVDA Selloff Catches Burry’s Eye, But Doubts Remain
“I am not tempted as a long-term hold from here, but I imagine the whole market is going to think this is a heck of a trade fairly soon,” Burry said. He does not expect the controversy surrounding CEO Jensen Huang to do much damage to Nvidia’s business. His bigger worry is how long the chipmaker can hold its competitive edge.
“Still, I believe Nvidia’s competitive advantage will shrink over the next five years,” he said. He warned that closer scrutiny of Nvidia’s China chip trade and its dealings across the AI industry could hasten the erosion.
Nvidia reports earnings next week even as its board investigates reports that CEO Jensen Huang was targeted by a foreign intelligence operation through an affair with a Chinese businesswoman. However, the board has backed his leadership and said it had no reason to believe national security or company secrets were compromised.
Where Burry’s Biggest Convictions Lie
Burry added to MercadoLibre twice recently, buying below $1,500 both times. “I like MELI’s prospects from the $1400s long-term,” he said. “MercadoLibre may head even lower. I expect to make another buy if it gets 20% lower from here.”
He has defended the company’s investment spending despite pressure on profits. Third-quarter revenue and financial income rose 45% to $10.75 billion, while operating profit fell 6% to $676 million as shipping, fulfillment and marketing costs weighed on margins.
