Nvidia's 'I'm Not Enron' memo has people asking a lot of questions (www.theverge.com)

A viral Substack post accused Nvidia of running an Enron-style accounting fraud; Nvidia quickly pushed back with a memo to analysts (seen by The Verge) denying the claims and addressing short-seller Michael Burry’s criticisms. Nvidia says Burry miscalculated stock-based compensation by improperly adding taxes on restricted stock units (RSUs) and insists it does not use special-purpose entities to hide debt or inflate revenue. The company emphasizes that the so-called “neocloud” firms it partners with—CoreWeave among them—are independent companies, not off‑balance‑sheet vehicles, though Nvidia often invests in them and is a major customer. The episode matters because it crystallizes a broader market concern: Nvidia’s close network of investments and customers can amplify its chip sales and revenue without being illegal, creating a potential feedback loop that inflates valuations across the AI infrastructure ecosystem. Technical and financial risks include future write‑downs of equity stakes if neoclouds fail, a possible glut of used Nvidia GPUs hitting the market (undercutting new sales), and concentrated counterparty exposure on corporate balance sheets. In short, the memo quells fraud allegations but highlights structural and market risks—legal yet potentially destabilizing—that investors and AI practitioners should monitor (RSU accounting, balance‑sheet exposure to neoclouds, and the consequences of large executive share sales).