“Big Short” investor is sharpening his AI short thesis, taking aim at the economics behind the GPUs powering the boom.
Burry recently made a call that hyperscalers are extending the lifecycle use of AI chips and hardware to understate asset depreciation and boost profitability. According to Burry, the fraudulent accounting practice will result in a $178 billion earnings distortion in the coming years.
But AI bulls are pushing back, arguing that GPUs can run profitably for six years, making the extended lifespan reasonable.
In a fresh post on X, Burry says AI bulls are missing the bigger picture.
“The idea of a useful life for depreciation being longer because chips from more than three to four years ago are fully booked confuses physical utilization with value creation. Just because something is used does not mean it is profitable. GAAP (generally accepted accounting principles) refers to economic benefits.”
Burry compares aging AI chips to old aircraft that airlines keep on standby only for holiday peaks. While they fly, the short seller says they barely make money and hold little long-term value.
“Airlines keep old planes around for overflow during Thanksgiving or Christmas, but are only marginally profitable on the planes all the same, and not worth much at all. A100s take 2-3x more power per FLOP (compute unit) so cost 2-3x more in electricity alone than H100s. And Nvidia claims H100 is 25x less energy efficient than Blackwell for inference.”
He warns that companies still depending on outdated hardware are likely doing so out of necessity, not strategy.
“If that is the direction you are going, chances are you have to be doing it, and it is not pleasant.”
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