“Big Short” investor warns that corporate AI fraud is hiding in plain sight

Michael Burry, yes, that Burry from The Big Short, is back with a fresh warning.

This time, he’s accusing Big Tech of quietly pumping up their AI-era profits through an accounting tweak that makes their hardware look like it lasts far longer than it actually does.

In a recent post, Burry pointed to Meta (META), Alphabet (GOOG), Oracle (ORCL), Microsoft (MSFT), and Amazon (AMZN), saying they’ve extended the “useful life” of their servers, data-center gear, and other AI infrastructure.

These changes have rolled out over the past few years, buried in company filings.

Here’s the shift he’s talking about:

• Alphabet and Microsoft have doubled their assumed hardware lifespan over ~5 years
• Meta went from 3 years to 5.5
• Amazon went from 4 years to as many as 6.

Burry’s point is that Big Tech is overstating how long their AI hardware will remain valuable and padding profits in the process.

Depreciation, he argues, is the tell. Extending an asset’s life lowers annual depreciation costs, which raises reported earnings even though cash flow stays exactly the same.

“Understating depreciation by extending useful life of assets artificially boosts earnings — one of the more common frauds of the modern era,” Burry wrote.

“Yet this is exactly what all the hyperscalers have done. By my estimates, they will understate depreciation by $176 billion 2026–2028.”

This isn’t the first red flag

Burry’s critique lines up with concerns raised in a Sept. 26 report from InvestorsObserver, which compared today’s AI buildout to a wartime-level spending boom.

Here are a few highlights:

• AI infrastructure is depreciating at roughly $40 billion per year
• AI-related revenues today are only about half that
• Meaning the industry may be running structurally unprofitable until revenue catches up

AI engineer Rohan Paul took it a step further, estimating companies would need around $480 billion in revenue this year just to offset current capex run rates.

A boom built on hope… or on math that doesn’t pencil out?

The disconnect between spending and earnings is already raising eyebrows, and Burry’s accusations only add fuel.

Analysts at BCA Research recently warned that Big Tech’s AI capex surge could disappoint investors.

“Capital spending booms rarely end well for investors. Deploying vast sums quickly often leads to poor capital allocation,” they wrote.

With depreciation games, runaway capex, and revenue lagging far behind hardware spending, the question isn’t whether AI is transformative but whether the business case can catch up to the enthusiasm.