• Michael Burry alleges major tech firms are inflating profits by extending equipment depreciation schedules
  • The investor estimates $176 billion in understated depreciation from 2026-2028, with Oracle and Meta potentially overstating earnings by 27% and 21% respectively
  • Burry indicated more detailed disclosures would be released on November 25

Michael Burry, the investor famous for his "Big Short" bet against subprime mortgages, has leveled serious allegations against major technology companies, claiming they may be engaging in what he termed "earnings fraud" through accounting practices related to asset depreciation.

In a detailed analysis that has begun circulating among institutional investors, Burry specifically targeted Oracle and Meta Platforms, arguing that their practice of extending the useful life of equipment—particularly AI infrastructure powered by Nvidia hardware—artificially inflates reported profits. According to people familiar with his research, Burry estimates this could lead to approximately $176 billion in understated depreciation expenses between 2026 and 2028.

"The hyperscalers' Nvidia-driven spending spree should be shortening depreciation cycles, not lengthening them," Burry wrote in correspondence reviewed by this publication. He calculates that Oracle could be overstating its earnings by as much as 27%, while Meta's earnings might be inflated by approximately 21% through these accounting practices.

The warning comes at a sensitive time for both companies. Meta recently saw its shares drop 11% after announcing larger-than-expected capital expenditures for AI infrastructure in 2026, highlighting investor sensitivity to the massive spending required to compete in artificial intelligence. Oracle, while maintaining profitability, faces increasing scrutiny over its accounting practices as it rapidly expands into cloud and AI services.

Efforts to reach representatives from both Oracle and Meta for comment were unsuccessful. A spokesperson for Burry's firm, Scion Asset Management, declined to elaborate beyond the circulated documents but confirmed that more detailed disclosures are planned for November 25.

Industry accountants expressed divided opinions on the allegations. "Extending asset lives during periods of heavy investment isn't necessarily improper, but it does require careful justification," said one accounting expert at a major audit firm who requested anonymity due to client relationships. "The key question is whether the extended useful lives reflect economic reality or merely window dressing for earnings."

Burry's analysis suggests that the massive capital expenditures in AI infrastructure should logically lead to shorter, not longer, depreciation periods given the rapid pace of technological obsolescence in hardware. His calculations indicate that if proper depreciation schedules were applied, the impact on reported earnings would be substantial for both companies.

This isn't Burry's first skeptical stance toward high-flying tech names. The investor has previously disclosed short positions against other technology companies including Palantir and Nvidia, reflecting his broader skepticism about current tech valuations amid the AI investment boom.

The timing of Burry's more detailed November 25 disclosure could create additional volatility in tech stocks, particularly if his analysis gains traction among institutional investors already concerned about the sustainability of current AI-driven capital expenditure cycles.

Correction: An earlier version of this article misstated the percentage of potential earnings overstatement for Meta. The correct figure is 21%, not 25%.