Remember Michael Burry? The guy who saw the 2008 housing crash coming while everyone else was sipping champagne? Well, he’s back with another “uh oh” moment, and this time he’s got his sights set on the AI boom that’s been making everyone rich (on paper, anyway).
Here’s the tea: Burry thinks Big Tech is basically playing accounting Jenga with their AI hardware, and when it falls, it’s gonna hurt.
The $176 Billion Oopsie
So what’s the deal? Companies like Meta, Oracle, and the usual suspects have been quietly extending how long they think their fancy AI servers will last. Instead of saying “this $90 million supercomputer will be toast in 3 years,” they’re now like “nah, this baby’s good for 6 years!”
Why does this matter? Because it’s basically financial sleight of hand. If you spread that $90 million cost over 6 years instead of 3, suddenly you’re “making” an extra $15 million in profit per year. Do this across thousands of machines, and boom – your earnings look absolutely stellar.
Burry’s math suggests this little trick could be inflating Big Tech profits by a whopping $176 billion through 2028. Oracle might be padding their numbers by 27%, Meta by 21%. That’s not pocket change – that’s “maybe we should pay attention” money.
But Wait, There’s a Plot Twist
Here’s where it gets interesting (and why Burry might be wrong this time). What if these AI machines actually DO last longer than the old stuff?
Think about it: we’re in an AI gold rush right now. Every GPU, every server, every piece of silicon is precious. Companies aren’t throwing out 3-year-old hardware – they’re finding ways to squeeze every last drop of performance out of it. Plus, better cooling and engineering means this stuff genuinely lasts longer.
So maybe extending depreciation schedules isn’t fraud – maybe it’s just… accurate?
The “Too Big to Fail” Factor
Even if Burry’s right about the numbers, there’s one massive difference between now and 2008: the government actually wants AI to succeed. This isn’t some random housing bubble – this is treated like national security.
SoftBank’s CEO just sold $5.8 billion worth of Nvidia stock, not because he’s bearish on AI, but because he wants to double down on OpenAI and a $500 billion AI infrastructure project. When billionaires are liquidating winners to bet even bigger, you know something’s up.
The Bottom Line
Look, Burry’s track record speaks for itself. When he waves red flags, smart money pays attention. But this AI boom has something the dot-com bubble and housing crisis didn’t: unprecedented government backing and genuine, explosive user adoption.
ChatGPT hit a million users in five days. Five. Days. That’s not hype – that’s a fundamental shift in how humans interact with technology.
So what’s an investor to do? Keep your eyes open. Watch those earnings quality metrics. But don’t bet against a revolution that has trillion-dollar companies, visionary billionaires, and Uncle Sam all pulling in the same direction.
Burry might be right about the accounting tricks, but this time, the powers that be really, really don’t want this bubble to pop.