When Michael Burry decided to short Nvidia (NVDA), he wasn't betting against the company's technology. It was a bet against the AI financing structure and macroeconomic conditions. We know today that he is losing money on this bet as Nvidia inches toward its all-time highs. But Burry isn't sitting idle with his short position. He recently took to social media platform X, posting about a startup that could challenge Nvidia's dominance.
Here's what Burry's post is about. A small startup is making a big claim against Nvidia. Founded by a group of Harvard dropouts, Etched is building a chip called Sohu. What the chip does is run transformer models, the architecture behind most of today's artificial intelligence. By designing the chip to do only that, Etched says it can run AI inference far faster and cheaper than Nvidia's general-purpose GPUs. It recently raised money at a $21 billion valuation. But to see why challengers like Etched are emerging, it helps to understand how AI actually runs.
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