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Why Michael Burry's Billion-Dollar Bet Against Nvidia And Palantir Might Miss The Mark

MarketDash Editorial Team
19 days ago
Michael Burry is wagering over $1 billion that the AI boom will crash, but a former Google executive says the famous short seller is fundamentally misunderstanding how modern data centers actually work.

When Michael Burry makes a billion-dollar bet, people pay attention. The investor who famously called the 2008 housing collapse has now set his sights on artificial intelligence, placing more than $1 billion in put options against two of the sector's biggest winners: Nvidia Corp (NVDA) and Palantir Technologies (PLTR).

His thesis? The AI boom is a bubble waiting to pop. But not everyone is buying it.

A Former Google Executive Says Burry Got His Math Wrong

David Friedberg, an early Alphabet Inc. (GOOG) executive and current entrepreneur, recently pushed back hard against Burry's analysis during an episode of the All-In Podcast. "I actually think Michael Burry's got this wrong," Friedberg said, taking aim at the core of Burry's argument.

Here's what Burry is claiming: tech giants like Google, Amazon.com, Inc. (AMZN), and Microsoft Corp (MSFT) are playing accounting games by extending the depreciation schedules on their data center equipment. According to Burry, these companies are doubling the "useful life" of servers and networking gear to make their profits look artificially strong. It's the kind of accounting sleight of hand that makes skeptical investors nervous.

But Friedberg argues these changes aren't financial engineering at all. They're just reflecting reality.

The Economics Of Data Centers Have Actually Changed

Here's where it gets interesting. Friedberg explained that the nature of data centers has fundamentally shifted over the past several years. They used to be dominated by storage hardware like hard drives, which had relatively short lifespans. But with the rise of AI, data centers have transformed into processing powerhouses where GPUs and TPUs handle the computational heavy lifting.

And those chips? They last way longer than anyone initially expected. Friedberg pointed to industry checks showing that 7- to 8-year-old chips are still running at full utilization. That's why Google made the call back in 2021 to extend the useful life of server and networking equipment from 3-4 years to 5-6 years.

"That actually justifies and validates the depreciation schedule being much longer versus shorter," Friedberg stated. In other words, if the equipment genuinely lasts longer and continues producing value, then longer depreciation timelines aren't creative accounting—they're just accurate accounting.

Meanwhile, The AI Stocks Keep Soaring

While Burry bets against the AI boom, the companies in his crosshairs continue to deliver impressive results. Earlier this month, Palantir reported third-quarter revenue of $1.18 billion, beating analyst expectations of $1.09 billion. The company also posted adjusted earnings of 21 cents per share, topping the projected 17 cents per share.

Nvidia, meanwhile, made history in October 2025 by becoming the first company to surpass a $5 trillion market valuation. The chipmaker currently holds a market cap of $4.41 trillion, while Palantir has reached $398.65 billion in market capitalization.

The stock performance tells the story: Nvidia shares are up 31.13% year to date, while Palantir has surged an eye-popping 122.54% over the same period.

All Eyes On Nvidia's Upcoming Earnings

Nvidia is expected to serve as a major bellwether for both the market and the tech sector when it reports third-quarter results on Wednesday after the closing bell. Analysts are anticipating revenue of $54.84 billion for the quarter, a massive jump from $35.08 billion a year ago. The company previously guided third-quarter revenue in the range of $52.92 billion to $55.08 billion.

The chipmaker continues to outperform most of its industry peers, ranking in the 98th percentile for Growth and the 92nd percentile for Quality in market rankings.

So who's right? Is Burry spotting the cracks in an overheated market, or is Friedberg correct that the economics of AI infrastructure genuinely support these valuations? The answer will likely unfold over the next several quarters as we see whether data center investments continue to generate the returns that companies are projecting. For now, though, the market is clearly siding with the AI bulls rather than the legendary short seller.

Back to News

Why Michael Burry's Billion-Dollar Bet Against Nvidia And Palantir Might Miss The Mark

MarketDash Editorial Team
19 days ago
Michael Burry is wagering over $1 billion that the AI boom will crash, but a former Google executive says the famous short seller is fundamentally misunderstanding how modern data centers actually work.

When Michael Burry makes a billion-dollar bet, people pay attention. The investor who famously called the 2008 housing collapse has now set his sights on artificial intelligence, placing more than $1 billion in put options against two of the sector's biggest winners: Nvidia Corp (NVDA) and Palantir Technologies (PLTR).

His thesis? The AI boom is a bubble waiting to pop. But not everyone is buying it.

A Former Google Executive Says Burry Got His Math Wrong

David Friedberg, an early Alphabet Inc. (GOOG) executive and current entrepreneur, recently pushed back hard against Burry's analysis during an episode of the All-In Podcast. "I actually think Michael Burry's got this wrong," Friedberg said, taking aim at the core of Burry's argument.

Here's what Burry is claiming: tech giants like Google, Amazon.com, Inc. (AMZN), and Microsoft Corp (MSFT) are playing accounting games by extending the depreciation schedules on their data center equipment. According to Burry, these companies are doubling the "useful life" of servers and networking gear to make their profits look artificially strong. It's the kind of accounting sleight of hand that makes skeptical investors nervous.

But Friedberg argues these changes aren't financial engineering at all. They're just reflecting reality.

The Economics Of Data Centers Have Actually Changed

Here's where it gets interesting. Friedberg explained that the nature of data centers has fundamentally shifted over the past several years. They used to be dominated by storage hardware like hard drives, which had relatively short lifespans. But with the rise of AI, data centers have transformed into processing powerhouses where GPUs and TPUs handle the computational heavy lifting.

And those chips? They last way longer than anyone initially expected. Friedberg pointed to industry checks showing that 7- to 8-year-old chips are still running at full utilization. That's why Google made the call back in 2021 to extend the useful life of server and networking equipment from 3-4 years to 5-6 years.

"That actually justifies and validates the depreciation schedule being much longer versus shorter," Friedberg stated. In other words, if the equipment genuinely lasts longer and continues producing value, then longer depreciation timelines aren't creative accounting—they're just accurate accounting.

Meanwhile, The AI Stocks Keep Soaring

While Burry bets against the AI boom, the companies in his crosshairs continue to deliver impressive results. Earlier this month, Palantir reported third-quarter revenue of $1.18 billion, beating analyst expectations of $1.09 billion. The company also posted adjusted earnings of 21 cents per share, topping the projected 17 cents per share.

Nvidia, meanwhile, made history in October 2025 by becoming the first company to surpass a $5 trillion market valuation. The chipmaker currently holds a market cap of $4.41 trillion, while Palantir has reached $398.65 billion in market capitalization.

The stock performance tells the story: Nvidia shares are up 31.13% year to date, while Palantir has surged an eye-popping 122.54% over the same period.

All Eyes On Nvidia's Upcoming Earnings

Nvidia is expected to serve as a major bellwether for both the market and the tech sector when it reports third-quarter results on Wednesday after the closing bell. Analysts are anticipating revenue of $54.84 billion for the quarter, a massive jump from $35.08 billion a year ago. The company previously guided third-quarter revenue in the range of $52.92 billion to $55.08 billion.

The chipmaker continues to outperform most of its industry peers, ranking in the 98th percentile for Growth and the 92nd percentile for Quality in market rankings.

So who's right? Is Burry spotting the cracks in an overheated market, or is Friedberg correct that the economics of AI infrastructure genuinely support these valuations? The answer will likely unfold over the next several quarters as we see whether data center investments continue to generate the returns that companies are projecting. For now, though, the market is clearly siding with the AI bulls rather than the legendary short seller.