"Big Short" accuses American tech giants of inflating AI profits

Michael Burry, the investor famous for “The Big Short,” is drawing attention by accusing several major American tech companies of using “aggressive” accounting to boost profits from the AI boom. In a post on X on Monday, the founder of Scion Asset Management claimed that “hyperscalers” — the leading cloud and AI infrastructure providers — are underestimating depreciation costs by estimating chip lifespans to be longer than they actually are.

Burry wrote: “Lowering depreciation by artificially extending the asset's lifespan will increase profits — this is one of the common fraudulent practices today.” He argues that sharply increasing capital spending to purchase Nvidia chips and servers on a 2–3 year cycle cannot extend the lifespan of computing equipment, but this is how hyperscalers are operating.

He estimates that from 2026 to 2028, this accounting behavior could inflate profits by about 176 billion USD, with Oracle and Meta potentially having their profits exaggerated by 27% and 21% respectively in 2028. However, proving this allegation may be difficult, as companies have the flexibility to estimate depreciation according to GAAP accounting standards.

Burry, who once bet against subprime mortgages before the 2008 crisis, warned this year that the excitement around AI is reminiscent of the tech bubble of the late 1990s. Recently, he announced put options with an estimated total value of about 187 million USD on Nvidia and 912 million USD on Palantir. This information led Palantir's CEO, Alex Karp, to describe Burry's bets as “very strange” and “completely insane.”

After these announcements, Nvidia's stock rose nearly 6% on Monday after falling 7% the previous week, while Palantir jumped nearly 9% after a decline of 11% the previous week. Burry stated he would provide more details on November 25 and advised readers to “stay tuned.”