By Laura Bratton
Publication Date: 2025-11-26 10:00:00
Nvidia (NVDA) sent a memo to Wall Street analysts over the weekend arguing that it is not engaged in vendor financing, a controversial practice in which suppliers invest in or extend loans to their own customers.
Famed short sellers Jim Chanos and Michael Burry aren’t so sure.
Nvidia wrote a seven-page document — first reported by Barron’s on Tuesday morning — rebuffing claims that it invests in its own customers to inflate its revenue. The memo was written in response to a newsletter from a little-known Substack author last week claiming that the $5 trillion AI chipmaker is engaged in a “circular financing scheme” — using vendor financing to boost sales — drawing parallels between Nvidia and famous dot-com era accounting frauds committed by Enron and Lucent.
Enron is notorious for manipulating its accounting and using off-balance sheet debt to hide losses in its broadband business during the internet boom. Internet infrastructure provider Lucent, meanwhile, is best known for aggressively investing in and extending loans to many of its loss-making telecom customers — who then used the funds to buy Lucent equipment that they couldn’t have otherwise afforded. When the dot-com bubble burst and telecom startups couldn’t pay back Lucent, the company had to write down revenue tied to those transactions and lost billions of dollars.
Chanos, who is famous for predicting the fall of Enron, thinks the comparison between Nvidia and Lucent bears weight.