Burry Fires Warning Shot at Custom-Chip Startups

Nvidia (NVDA) stock has been gaining attention from investors due to its strong performance in recent years. The company's CEO, Jensen Huang, recently pushed back on claims that Nvidia is facing competition from custom-chip startups like Etched.

Etched is a startup founded by Harvard dropouts that is building a chip called Sohu, which can run transformer models faster and cheaper than Nvidia's general-purpose GPUs. However, according to Michael Burry, a well-known investor, Etched's technology is not a serious threat to Nvidia's dominance.

Burry argued that for any company to compete against Jensen Huang, it must also secure corresponding manufacturing capacity. The global semiconductor supply chain is like a chessboard right now, and no startup can simply walk into a company like Taiwan Semiconductor (TSM) and ask for capacity already booked by trillion-dollar businesses.

Nvidia's dominance in the AI chip market has held strong despite the emergence of custom-chip projects. The company will report earnings next on Aug. 26, and investors will want to know whether its inference business is still growing fast enough to stay ahead of rivals.