Michael Burry Doubles Down On AI Bubble Claims As Short Trade Backfires: Says Oracle, Meta Are Overstating Earnings By 'Understating Depreciation'

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Michael Burry Doubles Down On AI Bubble Claims As Short Trade Backfires: Says Oracle, Meta Are Overstating Earnings By 'Understating Depreciation'

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Famed investor Michael Burry is doubling down on his AI bubble claims, as his short position backfires following the rally in key stocks early this week. As stocks rallied on Monday, Burry doubled ...

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(NASDAQ:PLTR) and Nvidia Corp. (NASDAQ:NVDA), alongside the broader AI sector, even as his nearly $1 billion wager began turning against him.\nIn a post on X, Burry accused tech giants such as Meta Platforms Inc. (NASDAQ:META) and Oracle Corp. (NYSE:ORCL) of “understating depreciation” by extending the useful life of assets, particularly chips and AI infrastructure. \nSee Also: Dan Ives Slams Michael Burry For Betting Against ‘Messi Of AI’ Palantir, Says He Is ‘Dead Wrong’\nBurry referred to this as one of the “more common frauds of the modern era,” used to inflate profits, and is something that he said all of the hyperscalers have since resorted to. “They will understate depreciation by $176 billion” through 2026 and 2028, he said.\nAs a result, Burry said that both Oracle and Meta are set to overstate their earnings by 26.9% and 20.8% by 2028, while adding that he has more details to reveal by November 28. \nSeveral prominent analysts have pushed back on Burry’s claims, even pointing out his history of making such high-conviction bets that didn't always pan out.\nDaniel Newman, CEO of The Futurum Group, acknowledged that Burry raised a valid point about depreciation practices at major tech firms but questioned whether he had the technical depth to assess the useful life of their assets as accurately as Meta's Mark Zuckerberg or Microsoft Corp. (NASDAQ:MSFT) CEO Satya Nadella.\nHe also added that “if the earnings are overstated short term, it would likely mean they are understated longer term,” as such accounting measures only shift expenses from one time period to another. \n“This isn't the same as shorting NINJA loans for houses,” Newman said, referring to Burry’s early claim to fame, when he shorted subprime mortgages in the lead up to the global financial crisis in 2008, which was the subject of the 2015 movie, “The Big Short.”\n“This is far more nuanced, technical, and saying fraud here is more [of] an indictment on the tax code than any of these companies.”\nInvestor Ross Gerber of Gerber Kawasaki Wealth and Investment Management noted in a post on X that Burry had a bad day on Monday. \nHe added, “You’d think he would have learned from the GameStop mess,” referring to Burry’s criticism of GameStop Corp.’s  (NYSE:GME) retail-driven rally in 2021, which he referred to as being “Unnatural, Insane, And Dangerous,” a warning which did little to cool the frenzy.\nGerber’s insinuating that Burry might be headed to a similar conclusion by taking on Palantir, which is another retail favorite stock. \nRead More: \nPhoto courtesy: Shutterstock","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"-1","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0,"need_auth":false,"code":"91000000","status":"200"},"commentList":[],"hasMoreComments":false,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":1,"likeStatus":false,"favoriteStatus":false},"isCrawlerRequest":true}