‘Big Short’ investor Michael Burry accuses AI hyperscalers of artificially boosting earningsYun LiCNBCWed, 12 November 2025 2:00PM
Michael Burry, the investor made famous by “The Big Short” who recently roiled the market with a tech short bet, is accusing some of America’s largest technology companies of using aggressive accounting to pad their profits from the artificial intelligence boom.
In a post Monday on X, the Scion Asset Management founder alleged that “hyperscalers” — the major cloud and AI infrastructure providers — are understating depreciation expenses by estimating that chips will have a longer life cycle than is realistic.
“Understating depreciation by extending useful life of assets artificially boosts earnings – one of the more common frauds of the modern era,” Mr Burry wrote.
“Massively ramping capex through purchase of Nvidia chips/servers on a 2-3 yr product cycle should not result in the extension of useful lives of compute equipment. Yet this is exactly what all the hyperscalers have done.”
He estimated that from 2026 through 2028, the accounting manoeuvre would understate depreciation by about $US176 billion ($270b), inflating reported earnings across the industry.
He singled out Oracle and Meta Platforms, saying their profits could be overstated by roughly 27 per cent and 21 per cent, respectively, by 2028.
CNBC has reached out to Oracle and Meta for comments. Nvidia declined to comment.
Mr Burry’s accusation is a serious one, but could be hard to prove because of the leeway companies are given in estimating depreciation. CNBC was not independently able to confirm this practice was being done by the companies.
When paying for a large asset upfront — like semiconductors, servers, etc — a company is then allowed under generally accepted accounting principles, or GAAP, to spread out the cost of that asset as a yearly expense that is based on the company’s estimate of how rapidly that asset depreciates in value.
If companies estimate a longer life cycle for the asset, they can then lower the yearly depreciation expense that hits the bottom line.
Mr Burry, who famously bet against subprime mortgages before the 2008 financial crisis, has warned this year that AI enthusiasm resembles the late-1990s tech bubble.
He last week revealed seemingly fresh wagers against AI favourites Nvidia and Palantir Technologies. He disclosed put options with a notional value of about $US187 million ($287m) against Nvidia and $US912m ($1.4b) against Palantir as of September 30, according to a regulatory filing. The filing didn’t specify the strike prices or expiration dates of the contracts.
The disclosure prompted a sharp reaction from Palantir CEO Alex Karp, who called Mr Burry’s wagers “super weird” and “bats— crazy.” It’s not clear whether he still holds those positions or whether they were just a hedge.
Shares of Nvidia rebounded nearly 6 per cent on Monday after dropping 7 per cent last week. Palantir saw its shares pop almost 9 per cent on Monday following a 11 per cent sell-off last week. Nvidia was lower again on Tuesday.
Mr Burry said in his X post that “more detail” was coming on November 25 and that readers should “stay tuned.”
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