Michael Burry, the investor known for predicting the 2008 housing crisis, has raised concerns about major tech companies potentially understating depreciation by extending the useful life of computing assets.
In a recent social media post, Burry claimed that "understating depreciation by extending useful life of assets artificially boosts earnings," calling it "one of the more common frauds of the modern era."
The investor specifically targeted tech companies purchasing NVIDIA chips and servers, arguing they should not be extending the useful lives of computing equipment that typically has a 2-3 year product cycle. According to Burry, "hyperscalers" are doing exactly this.
Burry estimates these companies will understate depreciation by $176 billion between 2026-2028. By 2028, he projects Oracle will overstate earnings by 26.9% and Meta Platforms, Inc. by 20.8%. He promised more details would be coming on November 25.
The "Big Short" investor has been increasingly vocal on social media platform X since October 30, when he posted a cryptic message about bubbles and market participation. That post came just days before he disclosed owning put options on Palantir and NVIDIA.
Burry is not alone in raising these concerns. Other short sellers, including Jim Chanos, have also highlighted issues with depreciation practices, noting that companies were using innovative financing to remove equipment from their balance sheets.