“Big Short” investor Steve Eisman is responding to Michael Burry’s warning that hyperscalers are inflating their earnings by adjusting depreciation schedules.
Burry, a fellow “Big Short” investor, has recently argued that major tech firms could be overstating their future profitability by extending the lifecycles of AI chips and servers.
According to Burry, Meta, Google, Oracle, Microsoft and Amazon will understate the depreciation of their AI hardware and distort the earnings picture by $176 billion, effectively committing modern era fraud.
But Eisman notes that even if Burry’s argument is right on the money, it won’t matter at the end of the day.
“And here are my thoughts. Let’s accept Burry’s argument as a given. I just don’t think his concerns matter that much. The big question as to AI spending is what kind of returns and cost savings these massive investments will or won’t bring.
That is the key question. And we won’t know the answer for a while. And the answer will not be determined either way by a change in depreciation schedules.”
In a new episode of the All-In Podcast, billionaire Chamath Palihapitiya said Burry doesn’t have the technical expertise to make a sound argument about the lifecycle of AI chips and servers. He also noted that the AI giants have solid business models with a large pool of resources and talent that they don’t have to cook the books.
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