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

Michael Burry warns that cloud giants like Meta, Amazon, and Microsoft are underestimating depreciation and artificially inflating profits by extending equipment useful life, which could constitute accounting fraud. (Background: In “The Big Short,” Burry, who had been quiet for two years, warns of a bubble again: sometimes the best winning move is not to participate.) (Additional context: Michael Burry of “The Big Short” has liquidated his holdings this season! Why is he shifting to short Nvidia and Chinese tech stocks?) He warns that industry leaders such as Meta, Amazon, and Microsoft are using “extended equipment lifespan” to understate depreciation and boost profits. 1. Core accusation: They are systematically underestimating depreciation through accounting tricks, artificially inflating earnings. Burry estimates that between 2026-2028, this practice will cause these giants to underreport $176 billion in depreciation expenses. 2. Why does Burry call this fraud? His logic is simple: tech giants like META, GOOGLE, MSFT, are frantically purchasing AI 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, showing how widespread this accounting practice has become in recent years: $META, depreciation period extended 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 reported depreciation rate has slowed, which is a dangerous signal. 4. What does this mean for investors? – True P/E is higher: The PE ratio you see might be fake. If Burry is correct, then the denominator (Earnings) is systematically overestimated. Investors’ actual purchase costs are much higher than they appear. – Hidden costs: These are the hidden costs of the AI arms race. Giants are using accounting tricks to hide the staggering capital expenditure needed to maintain their AI dominance. – Burry even quantifies the impact: by 2028, earnings for $E4 will be overstated by 26.9%, and META by 20.8%. 5. Burry is revealing a systemic risk. Amid the AI gold rush, giants may be using creative accounting to hide the true costs of Nvidia chips. 6. Burry plans to release more details on November 25. Related reports Wall Street giants enter the game: JPM Coin, a USD deposit token from JPMorgan Chase, enables 24/7 trading and instant payments Peter Schiff: Bitcoin is a complete bubble; “surge is manipulated by Wall Street,” gold is the real safe haven Wall Street Journal warns: the US is experiencing a gambling bubble from sports to AI, with Trump as a catalyst. “The Big Short” star Michael Burry strikes again: tech giants are collectively committing fraud. This article was first published by BlockTempo, the most influential blockchain news media.