❯ Culper’s May short report resurfaces, reviving its questions about Nvidia’s relationship with major customer Megaspeed

Why an old report is being read againAfter Nvidia’s board announced its independent inquiry, TechCrunch revisited a May 13 report on Nvidia by short seller Culper Research on November 9. Culper disclosed a short position in Nvidia when it published the report, and one of the businesses it examined was Singapore data center company Megaspeed. It described the relationship between Nvidia CEO Jensen Huang and former Megaspeed executive Alice Huang as unusually close. The report discussed those contacts in its examination of Nvidia’s relationship with a major customer.

Culper started with the customer’s rapid expansionIn its account of the research, Culper drew on corporate registrations, financial information, and supply-chain records to ask how a data center customer had scaled up purchasing so quickly. TechCrunch’s account of the records cited by Culper put Megaspeed’s combined liabilities and equity at about $33 million at the end of 2023 and about $3 billion a year later. A substantial share took the form of refundable deposits. That was a balance-sheet measure, and Culper used it to raise questions about the source of the funds and the customer relationship.

Where commercial and personal ties meetIn discussing Nvidia’s treatment of Megaspeed, Culper cited occasions when the executives appeared together or met in business settings, and argued that Nvidia should explain the relationship. Those were observations and judgments by a short seller. For a company that buys hardware, builds data center capacity, and rents it to customers, the business questions include whether its funding can sustain operations, whether its purchase demand is durable, and whether the supplier applies consistent rules to its customers.

The short report and the board inquiry are at different stagesCulper’s disclosed position in May meant it could profit from a decline in Nvidia shares. This week Jensen Huang acknowledged an extramarital relationship in a letter to employees without naming the other person. The independent board committee has yet to report findings. There are no public conclusions on whether a personal relationship affected either company’s business approvals.

▮ SIGNALWhen a fast-growing chip customer is also a relationship the CEO handles personally, independently checking its funding, end demand, and internal approvals gives the supplier a firmer basis for commercial decisions.