He warned that cloud giants including Meta, Amazon, and Microsoft are underestimating depreciation and artificially inflating profits through "extending device lifespans."
Author: Hedgehog Whale
- The core accusation is that they are systematically underestimating depreciation through accounting methods, thereby artificially exaggerating earnings.
Burry estimates that between 2026 and 2028, this operation will lead the giants to underreport $176 billion in depreciation expenses.
- Why does Burry call it fraud?
Burry's logic is simple:
Tech giants like META, GOOGLE, MSFT… are frantically purchasing $NVDA chips/servers for the AI arms race. The actual product lifecycle of this hardware is only 2-3 years.
However, in their financial reports, they are extending the lifespan of these computing devices to 5 years or even 6 years.
By amortizing the huge costs over a longer period, they report lower depreciation expenses each year, resulting in higher profits.
- Burry provided evidence from company SEC filings, showing how common this accounting game has become in recent years:
$META, depreciation lifespan extended from 3 years ➔ 5.5 years
$GOOG, from 3 years ➔ 6 years
$MSFT, from 3 years ➔ 6 years
$AMZN, from 3 years ➔ 6 years
As the pace of AI hardware iteration accelerates, the speed of depreciation on financial reports has actually slowed down, which is a dangerous signal.
- What does this mean for investors?
The real P/E is higher; the price-to-earnings ratio you see may be false. If Burry is correct, then the denominator, Earnings, is systematically overestimated. The actual cost of buying for investors is much higher than it appears.
Hidden costs; this is the hidden cost of the AI arms race. The giants are using accounting tricks to cover up the astonishing capital consumption required to maintain their AI dominance.
Burry even quantified the impact, predicting that by 2028, $ORCL's earnings will be overstated by 26.9%, and META's will be overstated by 20.8%.
Burry is revealing a systemic risk; in the gold rush of AI, the giants may be using creative accounting to hide the shovels, which is the true cost of Nvidia chips.
Burry has announced that more details will be released on November 25.
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