'Freefall': Ken Griffin's GPU Warning Gets Blunt Backing From Michael Burry

Michael Burry has issued a blunt one-line verdict on Ken Griffin's warning that the artificial intelligence boom could end in a graphics processing unit (GPU) price collapse, backing the Citadel billionaire's prediction that computing capacity could become so abundant that rental prices go into 'freefall'.

Burry delivered a straightforward response in an X post on Monday to a post outlining Griffin's concerns about the GPU market.

'This is obvious to most with a working brain cell,' Burry wrote, endorsing the argument that an oversupply of AI chips could trigger a sharp decline in rental prices and undermine the economics of companies investing heavily in computing infrastructure.

Griffin had raised the concern during an appearance on Bloomberg Talks the previous week. Drawing parallels with the telecommunications infrastructure boom around 2000, he warned that excessive investment in computing capacity could eventually leave the industry with more GPUs than customers need.

'We built more fibre than we had demand for, and the price of telecommunications just went straight down,' Griffin had said, recalling the earlier infrastructure expansion.

He argued that a similar outcome could emerge in AI if GPU supply exceeds demand. 'If we reach a point where the provisioning of GPUs exceeds demand for GPUs, marginal pricing will actually go into freefall,' Griffin had warned.

Why a GPU Glut Could Hit AI Stocks

The concern centres on the economics of renting computing power. Once GPUs are installed and operational, the additional cost of renting out existing capacity for another hour is relatively low.

If providers build more computing capacity than customers require, they could be forced to lower rental prices to keep their equipment occupied. That would squeeze the profitability of infrastructure operators and potentially reduce demand for additional chips.

Nvidia and Advanced Micro Devices (AMD) could face the consequences through weaker orders from customers, while specialised cloud computing providers such as CoreWeave could be exposed more directly because GPU rentals are central to their businesses.

Nvidia's own financial history illustrates how quickly profitability can deteriorate when demand weakens. During fiscal 2023, when the company's revenue remained broadly flat at $27 billion, its gross margin fell to 56.9% from 64.9% in the previous financial year.

The situation has since improved considerably. Nvidia maintained gross margins above 70% in subsequent years, reaching 75% in the quarter ended July 2026.

GPU Rental Prices Still Signal Supply Constraints

Despite Griffin's warning, current GPU rental prices do not indicate that an oversupply has already emerged.

Social Capital reportedly highlighted that the cost of renting Nvidia's H100 GPUs had increased 45% since December, despite the chip having been available since 2022 and two newer generations subsequently reaching the market.

Social Capital founder Chamath Palihapitiya attributed the continued pricing strength to electricity constraints, arguing that power availability remains a significant obstacle to expanding computing capacity.

The limitation means that additional GPUs cannot necessarily be deployed immediately, even when companies have access to the hardware. Without sufficient electricity and data centre capacity, the industry could continue experiencing supply shortages despite substantial investments.

CoreWeave Faces Pressure as Margins Narrow

CoreWeave could be particularly vulnerable if GPU rental prices eventually decline. The company's operating margin dropped markedly in 2025 compared with 2024, leaving little room for further deterioration if rental rates weaken.

Blackstone President and Chief Operating Officer Jon Gray discussed the economics of specialised cloud computing providers on Bloomberg Talks, describing their underlying business as strong but highlighting the importance of delivering computing capacity.

Meanwhile, Bloomberg Talks host Dani Burger noted that yields on some of CoreWeave's debt had reached 15%, illustrating the financing pressures facing parts of the AI infrastructure industry.

A sustained decline in GPU rental prices could make it harder for operators to cover financing and operating costs, potentially reducing their willingness to purchase additional chips. For Nvidia and AMD, that could eventually translate into weaker demand from infrastructure customers.

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