Michael Burry, the hedge fund manager who gained notoriety from “The Big Short,” has accused some of America’s largest technology companies of employing aggressive accounting methods to enhance profits stemming from the current artificial intelligence boom.
In a statement posted Monday on X, Burry, founder of Scion Asset Management, alleged that major providers of cloud and AI infrastructure—known as “hyperscalers”—are underestimating depreciation expenses by suggesting their chips have longer lifespans than they do in reality. According to Burry, this tactic can offer an artificial boost to corporate earnings, describing it as “one of the more common frauds of the modern era.”
He emphasized that when firms ramp up capital expenditure with purchases of Nvidia chips and servers, which typically follow a 2-3 year product cycle, this should not lead to extending the useful lives of computing equipment. Yet, according to Burry, all of the hyperscalers have followed this approach.
Burry projected that between 2026 and 2028, this accounting strategy would result in an understatement of roughly $176 billion in depreciation, thus inflating earnings across the industry. He singled out Oracle and Meta Platforms, estimating, based on his analysis, that their reported profits could be exaggerated by approximately 27% and 21%, respectively, by 2028.
On Monday, Scion Asset Management revealed it had taken put option positions—wagers that share prices will decline—in two prominent AI-driven firms, Nvidia (NVDA) and Palantir (PLTR). According to filings with the Securities and Exchange Commission, Scion acquired about $187.6 million in puts against Nvidia and $912 million in puts against Palantir.
Burry is positioning himself against some of the most sought-after AI stocks at a time when concerns about an overheated market are rising. The recent surge in technology and AI equities has propelled the broader market higher, with the S&P 500 now heavily concentrated in tech stocks and trading at historically elevated valuations.
A legendary figure in financial circles, Michael Burry is widely recognized for having accurately predicted the 2008 U.S. housing market crash. His story was featured in Michael Lewis’s best-selling 2010 book “The Big Short: Inside the Doomsday Machine” and depicted on screen by Christian Bale in the 2015 film adaptation.
