Michael Burry, the hedge fund manager best known for predicting the 2008 housing market crash and inspiring the film The Big Short, has accused major technology companies of manipulating their earnings.
According to Burry, this manipulation occurs by extending the depreciation schedules of computing and networking equipment, a tactic he called one of the “common frauds of the modern era” in an X post on November 10.
“Understating depreciation by extending useful life of assets artificially boosts earnings -one of the more common frauds of the modern era,” Burry said.
His criticism targets tech giants including Meta, Alphabet, Microsoft, Oracle, and Amazon, which have gradually lengthened the useful lives of their data center and compute assets.
Company filings show that Meta extended its depreciation period from three years in 2020 to five and a half years by 2025. Alphabet and Microsoft have stretched theirs to six years, while Amazon and Oracle made similar adjustments.
Accounting misrepresentations
By increasing these useful life assumptions, companies reduce annual depreciation expenses, boosting reported earnings. Burry argued this accounting tactic misrepresents profitability, particularly since Nvidia-powered AI servers, the main driver of recent capital spending, typically operate on much shorter two- to three-year product cycles.
He estimates the extended schedules will understate depreciation by about $176 billion between 2026 and 2028, resulting in overstated profits across the sector. Burry’s calculations suggest Oracle’s earnings could be inflated by 26.9% and Meta’s by 20.8% by 2028.
The investor said he will release a detailed breakdown of his findings on November 25.
It is worth noting that Burry’s call comes after it emerged that the investor has taken a massive short position against two of the market’s most popular AI stocks, Nvidia and Palantir.
Regulatory filings show that Burry’s hedge fund placed $912 million in put options against Palantir and $186.6 million against Nvidia during the third quarter of 2025, totaling roughly $1.1 billion.
Both companies are trading at stretched valuations, with Palantir carrying a price-to-earnings ratio of 417 and a price-to-sales ratio of 116.
Following the disclosure, Nvidia stock briefly fell but has since recovered.
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