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Michael Burry on Thursday warned that Nvidia Corp.’s (NVDA) “purchase commitments” are akin to the ones announced by Cisco Systems Inc. (CSCO) at the top of the dot-com bubble.

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According to a CNBC report citing Burry’s latest Substack newsletter, “The Big Short” investor pointed out that there is a surge in Nvidia’s purchase obligations, which rose to $95.2 billion at the end of the fourth quarter (Q4), compared to $16.1 billion a year ago.

“This is not business as usual. This is risk. Back in 2000-2001, Cisco extended purchase commitments with its suppliers to ensure capacity for that 50% annual growth Cisco expected,” Burry said, according to the report.

Nvidia’s shares were down nearly 5% in Thursday morning’s trade. Retail sentiment on Stocktwits around the company trended in the ‘extremely bullish’ territory at the time of writing.

Parallels To Cisco’s Supply Commitments

Burry drew parallels to Cisco securing large supply commitments in 2000 and 2001, but when demand tumbled, the company was left with excess inventory.

Notably, Nvidia’s Chief Financial Officer Colette Kress stated in a post-earnings call with analysts that the company’s inventory has increased 8% quarter-on-quarter, while adding that Nvidia had “strategically secured inventory and capacity to meet beyond the next several quarters, further out in time than usual.”

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