Mike Burry Accuses Tech Giants of Overstating Earnings Through Depreciation Tricks

Scion Asset Management's Mike Burry has launched a scathing critique against major cloud and AI infrastructure companies, accusing them of manipulating depreciation accounting to inflate earnings. The so-called 'hyperscalers'—including Oracle and Meta—are allegedly extending the useful life of AI chips and servers beyond realistic timelines, artificially boosting profits.

Burry's analysis suggests this accounting sleight-of-hand could overstate Oracle's earnings by 27% and Meta's by 21% by 2028. The practice exploits GAAP rules that allow companies to self-determine asset lifespans, despite the 2-3 year product cycles typical for Nvidia chips and servers. Cumulatively, Burry estimates $176 billion in understated depreciation across the AI industry from 2026-2028.

'Understating depreciation by extending useful life of assets artificially boosts earnings—one of the more common frauds of the modern era,' Burry wrote in a characteristically blunt X post. The warning comes as tech firms dramatically increase capital expenditures on AI infrastructure while potentially masking the true cost through creative accounting.