Remember Michael Burry? The guy who saw the 2008 housing crash coming from a mile away while everyone else was still doing the Macarena at mortgage parties? Well, he’s back with another “uh oh” moment, and this time he’s got his sights set on the AI boom.
Here’s the deal: Burry thinks Big Tech is pulling some creative accounting shenanigans that would make even a Hollywood producer blush. His beef? These companies are basically saying their shiny new AI servers will last twice as long as they actually will, which makes their profits look way better on paper.
The Accounting Magic Trick
Picture this: You buy a $90 million AI supercomputer (because apparently that’s a thing now). In the real world, it’ll probably be obsolete faster than your iPhone. But instead of writing off $30 million per year over three years, companies are saying “Nah, this baby will last six years!” and only writing off $15 million annually.
Boom – instant $15 million in extra “profits” per machine. Multiply that across thousands of servers, and suddenly you’re looking at some seriously inflated earnings.
According to Burry’s number-crunching, companies like Meta and Oracle have basically doubled how long they claim their AI gear will last. Meta went from three years to 5.5 years, Google jumped from three to six years. It’s like claiming your car will run for 300,000 miles when you know it’ll probably die at 150,000.
The $176 Billion Question
Burry estimates this accounting gymnastics could inflate Big Tech profits by a whopping $176 billion through 2028. That’s not pocket change – that’s “buy a small country” money. He thinks Oracle might be padding profits by 27% and Meta by 21% through this move.
If he’s right, we could be looking at a 40-50% haircut for Big Tech stocks when reality comes knocking. Ouch.
But Wait, There’s a Plot Twist
Here’s where it gets interesting: What if this time really is different? (Yeah, I know, famous last words.) The AI boom has some serious heavyweight backing that previous bubbles didn’t have.
We’re talking about governments treating AI like national security infrastructure. SoftBank’s CEO just dumped $5.8 billion in Nvidia stock – not because he’s bearish on AI, but because he wants to go all-in on a $500 billion “Project Stargate” to build more AI data centers.
When Uncle Sam is basically saying “AI must win at all costs,” normal market rules might not apply. It’s like the Manhattan Project, but with chatbots.
The Bottom Line
Look, Burry’s track record speaks for itself. When he waves red flags, smart money pays attention. But this AI revolution has some pretty powerful people determined not to let it fail.
Maybe those servers really will last longer thanks to better engineering. Maybe the unprecedented demand means even “old” AI chips stay useful. Or maybe we’re all just living in a bubble that’s too big to pop.
Either way, keep your eyes open. Watch those earnings reports closely, especially around 2026-2027 when we’ll find out if these AI machines are really built to last or if they’re just expensive paperweights in disguise.
Because if Burry’s right again, a lot of people are going to have some very expensive lessons to learn.