Renowned investor Michael Burry is increasing his bet against the artificial intelligence sector, citing concerns over tech giants like Oracle and Meta overstating their earnings. Burry claims that these companies are inflating profits by extending the life of assets such as chips and AI infrastructure, which he says is a common practice known as “fraud.” He estimates this practice will result in Oracle and Meta overstate their earnings by 26.9% and 20.8%, respectively.
However, several top analysts have pushed back on Burry’s claims, arguing that his technical depth may be lacking when it comes to assessing the useful life of these companies’ assets. They also point out that if earnings are overstated in the short term, they may actually be understated in the long term due to accounting measures shifting expenses from one time period to another.
Burry’s claims have sparked controversy, with some accusing him of learning little from his previous mistakes, such as criticizing GameStop Corp.’s retail-driven rally in 2021.
Source: https://www.benzinga.com/markets/equities/25/11/48774428/michael-burry-doubles-down-on-ai-bubble-claims-as-short-trade-backfires-says-oracle-meta-are-overstating-earnings-by-understating-depreciation