The debate over Nvidia's (NVDA) financial health just got more heated. Tech analyst Ming-Chi Kuo, known for his Apple supply chain insights, is firing back at critics who've suggested the chipmaker's metrics look suspiciously fraudulent.

Why Kuo Says the Fraud Claims Don't Hold Water

In a post on X Monday, Kuo went after the idea that Nvidia's Days Sales Outstanding and inventory figures are abnormal. According to him, these numbers are perfectly reasonable given standard financial practices and how the semiconductor industry actually works.

"It is entirely reasonable for DSO to rise as receivables become more concentrated in a handful of large customers. This reflects the bargaining power of key accounts," Kuo wrote.

Here's his argument: Critics are comparing Nvidia to the wrong companies. When you stack Nvidia against suppliers selling to the same cloud service providers—companies that routinely show DSOs above 60 to 70 days—suddenly Nvidia's numbers don't look unusual at all.

On the inventory front, Kuo points out what he sees as a basic factual mistake. Critics claim Nvidia's 32% quarter-over-quarter inventory jump in Q3 FY26 looks suspicious. But Kuo says they're wrong about the baseline: Nvidia's Q2 FY23 inventory actually rose about 23% quarter-over-quarter, it didn't decline. The recent 32% increase, he argues, makes perfect sense given the massive ramp-up in upstream capacity at TSMC (TSM).

The surge is largely driven by a 98% jump in work-in-process inventory tied to mass production of the new Blackwell B300 GPU. According to Kuo, this is "far from being evidence of fraud"—it's just Nvidia preparing for what it expects to be strong demand for the B300.

What the Critics Are Actually Saying

Kuo's defense comes as scrutiny of Nvidia's financials intensifies. Independent researcher Shanaka Anslem Perera published a blog post on November 21 alleging a "$610 Billion Fraud," pointing to several red flags: an 89% surge in accounts receivable, longer payment cycles, that 32% inventory increase, and weaker cash conversion compared to peers.

Perera also raised concerns about what he sees as circular funding flows across the AI ecosystem involving xAI, Microsoft (MSFT), and Oracle (ORCL). His theory? Massive chip purchases are being financed through a web of intertwined investments and credit arrangements. He noted recent large exits by investors including Peter Thiel, SoftBank, and Michael Burry, warning that further drops in Nvidia's stock could trigger forced liquidations that spill into crypto markets.

Burry himself has been vocal about questioning Nvidia's capital allocation strategy, particularly its aggressive share repurchases. His analysis suggests these buybacks haven't actually created value for shareholders.

The Bull Case Remains Strong

Despite the controversy swirling after Nvidia's latest results, plenty of analysts remain firmly in the bull camp. Wedbush's Dan Ives wrote on X that "Nvidia monster earnings were a major validation moment for the AI Revolution despite today's sell-off."

Venture capitalist Chamath Palihapitiya and his co-host David Friedberg also weighed in during the latest episode of the All-In Podcast, dismissing Burry's claims entirely. They argued that accusations of hidden or deceptive accounting are unfounded because all the information is fully disclosed in Nvidia's public filings. Friedberg emphasized that investors can easily reconcile earnings and cash flow just by reviewing the company's cash flow statement.

The company's fundamentals still look solid to many observers. Market data places Nvidia in the 93rd percentile for quality and the 83rd percentile for momentum, reflecting strong performance in both areas.

So who's right? Kuo and the bulls argue that critics are misunderstanding normal industry dynamics and making basic factual errors. The skeptics counter that the patterns they're seeing—surging receivables, inventory buildup, aggressive buybacks—add up to something concerning. For now, the debate continues, with billions of dollars in market value hanging in the balance.