‘Big Short’ Investor Michael Burry Accuses AI Hyperscalers of Artificially Inflating Profits

Michael Burry, the investor made famous by “The Big Short” who recently shook the market with a short bet on technology, is accusing some of America’s biggest tech companies of using aggressive accounting to boost profits thanks to the artificial intelligence boom.

In an article published Monday on

“Underestimating depreciation by extending the useful life of assets artificially increases profits – one of the most common frauds of the modern era,” Burry wrote. “A massive increase in investment through the purchase of Nvidia chips/servers over a 2-3 year product cycle is not expected to result in an extension of the useful life of IT equipment. Yet that is exactly what all hyperscalers have done.”

Burry estimated that from 2026 to 2028, the accounting maneuver would understate depreciation by about $176 billion, inflating reported profits across the industry. He distinguished Oracle And Meta The platforms estimate that their profits could be overestimated by around 27% and 21%, respectively, by 2028.

CNBC has contacted Oracle and Meta for comment. Nvidia declined to comment. Burry’s accusation is serious, but it could be difficult to prove because of the latitude given to companies in estimating depreciation. CNBC was unable to independently confirm that these practices were being followed by the companies.

When it prepays for a large asset – such as semiconductors, servers, etc. – a company is then allowed, under generally accepted accounting principles, or GAAP, to allocate the cost of that asset as an annual expense based on the company’s estimate of how quickly that asset is depreciating. If companies estimate a longer life cycle for the asset, then they can reduce the annual depreciation expense that affects the bottom line.

Burry, who bet against subprime mortgages before the 2008 financial crisis, warned this year that enthusiasm for AI resembles the tech bubble of the late 1990s.

Burry last week revealed seemingly new bets against AI favorites Nvidia and Palantir Technologies. It disclosed put options with a notional value of about $187 million against Nvidia and $912 million against Palantir as of Sept. 30, according to a regulatory filing. The filing does not specify strike prices or expiration dates of the contracts.

The disclosure sparked a strong reaction from Palantir CEO Alex Karp, who called Burry’s bets “super weird” and “bats… crazy.” It is unclear whether he still holds these positions or whether they were just a cover.

Nvidia shares rebounded nearly 6% on Monday after falling 7% last week. Palantir saw its shares jump nearly 9% on Monday after an 11% selloff last week. Nvidia was still down on Tuesday.

Burry said in his X article that “more details” would come on November 25 and that readers should “stay tuned.”