Michael Burry is escalating his critique of the AI boom, questioning how long Big Tech can sustain its data center spending spree without distorting earnings.
In a new post on X, the Big Short investor reiterates his view that mega-cap tech firms are resorting to financial engineering and leverage to sustain their AI ambitions.
“A question I have for ORCL, GOOG, META, MSFT, AMZN, NVDA, CAT, and all the rest, ‘When does the spending for AI data center buildout actually end?’ It is consuming all your cash flow, you are borrowing, you are financing in ways you never have, apparently because it is so urgent, because it scales? But if it scales, when does it end?
Now you are engaging in accounting tricks to hide expenses, to protect earnings, as the impact is so severe. You will be tortuously adjusting your earnings in new and sinister ways. When does it end?”
Looking at the chart, Burry appears to outline potential scenarios of overstatement in earnings for 2026 through 2028 based on assumptions about the useful lives of chips and servers.
He argues that if companies assume longer useful lives for expensive AI hardware, they spread those costs over more years, lowering annual depreciation expense and boosting reported earnings. If the hardware wears out faster than assumed, earnings could be overstated.
Under Burry’s estimate, the average earnings overstatement across the firms shown is about 24%, with cumulative depreciation variance totaling roughly $226.6 billion over the 2026–2028 period.
Burry also highlights the aggregate revenue base of the largest technology firms, noting that they don’t have the money to sustain the massive AI buildout.
“The total revenues of Amazon, Apple, Alphabet, Microsoft, Meta, and Nvidia together do not make up $2 trillion. So you see why leverage is being used to build those data centers.”
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