Michael Burry Warns of $176B Depreciation Gap in Tech Giants
Michael Burry, well-known for his prediction of the 2008 housing crisis, is raising concerns about the accounting practices of major technology companies. In a recent statement shared on X, the investor highlighted a potential depreciation gap of $176 billion among these tech giants from 2026 to 2028. He asserts that this discrepancy may lead to inflated earnings reports, misleading investors.
Concerns Over Inflation of Earnings
Burry’s analysis suggests that various tech firms could significantly overstate their earnings due to alleged underreporting of depreciation. Notably, he estimates that Oracle (ORCL) could exaggerate earnings by 26.9% by 2028. Meanwhile, Meta (META) may inflate its profits by 20.8% in the same period.
Bearish Bets on AI Industry
This warning follows Burry’s recent announcement of holding put options against Nvidia (NVDA) and Palantir (PLTR), indicating a bearish outlook on the artificial intelligence sector. He plans to release further insights on November 25, 2025.
Depreciation Practices Under Fire
Burry’s main focus is on the “hyperscalers,” tech companies utilizing Nvidia chips. He criticizes these firms for extending the “useful life” of their computing and networking equipment, a practice he labels as “one of the more common frauds of the modern era.”
Impact of Extended Depreciation
By extending depreciation schedules from the conventional 2-3 years to as much as 5-6 years, these companies minimize reported expenses. This tactic results in a distorted view of their profitability.
Targeted Companies
- Meta
- Alphabet (GOOGL)
- Microsoft (MSFT)
- Oracle
- Amazon (AMZN)
Burry’s warning calls for careful scrutiny not only of earnings reports but also of the underlying accounting practices of these tech giants. Investors should remain vigilant as the market prepares for potential shifts in this sector.
