Big Short Michael Burry strikes again: Tech giants engaged in collective fraud

Author: Hedge Whale

1. Core allegation: They systematically underestimate depreciation through accounting tricks, artificially inflating profits.

Burry estimates that between 2026 and 2028 alone, this practice will cause giants to underreport $176 billion in depreciation expenses.

2. 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 financial reports, they extend the useful life of these computing devices to 5 or even 6 years.

Spreading large costs over a longer period results in lower annual depreciation expenses and higher profits.

3. Burry provides evidence from company SEC filings, with images showing how widespread this accounting practice has become in recent years:

$META : depreciation period from 3 years to 5.5 years

$GOOG : from 3 years to 6 years

$MSFT: from 3 years to 6 years

$AMZN : from 3 years to 6 years

As AI hardware iteration speeds up, the depreciation rate on financial statements has actually slowed down, which is a dangerous signal.

4. What does this mean for investors?

• The true P/E ratio is higher; the visible price-to-earnings ratio may be fake. If Burry is correct, the denominator (Earnings) is systematically overestimated. Investors’ actual purchase costs are much higher than they appear.

• Hidden costs: these are the implicit costs of the AI arms race. Giants are using accounting tricks to conceal the staggering capital consumption needed to maintain their AI dominance.

• Burry even quantifies the impact: by 2028, $ORCL profits will be overstated by 26.9%, META by 20.8%.

5. Burry is revealing a systemic risk: in the AI gold rush, giants may be using creative accounting to hide the real costs of chips, specifically Nvidia chips.

6. Burry has announced that more details will be released on November 25.