Michael Burry's Billion-Dollar AI Bubble Bet: What's He Seeing?

The AI "Revolution" is Just Creative Accounting

So, the "Big Short" guy, Michael Burry, comes out of hiding, and suddenly everyone's an expert on AI accounting? Give me a break. It's about damn time someone with a platform called out this BS.

Burry's been tweeting again, dropping cryptic messages about bubbles and not playing the game. Fine. But Jim Morrow at Callodine Capital has been screaming about this for months. And what does the market do? Yawns. Now that Burry, the Nostradamus of financial doom, chimes in, now people listen? Whatever.

The core of the issue? Big Tech is playing fast and loose with depreciation schedules. They're claiming their AI hardware lasts longer than it actually does, which makes their profits look artificially inflated. Meta extending the lifespan of their servers to 5.5 years? Seriously? In this environment? It's like saying your iPhone 6 is still cutting edge.

It's not just Burry and Morrow raising alarms either. Richard Jarc at Uncovered Alpha is saying similar things. The Economist called it "the $4 trillion accounting puzzle." But offcourse, the banks are saying everything is fine, this is just a minor correction. Who are you going to believe?

Data Centers of the Damned

Morrow drops this gem: "Every month a $35 billion stack of GPUs sits without power, that’s a billion dollars of depreciation just burning a hole in the balance sheet." A billion dollars! And these companies are "panicking" and ordering their own turbines? You know who's gonna end up paying for that? We are.

And let's be real, who even understands this stuff? We're throwing around terms like "hyperscale data centers" and "one-gigawatt" like everyone's an electrical engineer. These companies can't even manage projects of this scale, yet they're building them left and right. It's like watching a toddler play with dynamite.

I mean, what the hell is going on in Santa Clara and Northern Virginia? Data centers sitting idle, waiting for power hookups? It's the AI equivalent of ghost towns. A monument to overspending and hype.

And speaking of hype, has anyone stopped to think if all this spending is actually generating real productivity, or if it's just... spending? We’re mistaking capital intensity for actual growth. The market is valuing these companies as infrastructure plays, not software companies. It's insane.

Then again, maybe I'm the crazy one here. Maybe AI really is the future, and I'm just a grumpy old man yelling at clouds. But something about all this just smells rotten.

The "BaIlOuT" Is Coming

Morrow's right; we've seen this movie before. Shale, fiber, railroads... the ending is always the same: overcapacity, low returns, and a bailout. And who gets stuck with the bill? You guessed it.

The real kicker? Half of all 401(k) money is tied up in six megacaps. Six! This is not diversification; this is a recipe for disaster. When this thing turns – and it will turn – it's going to be ugly. According to a CNN article, Michael Burry of ‘The Big Short’ is back with cryptic messages — and two massive bets.

This Ain't a Revolution, It's a Ponzi Scheme