Michael Burry has a regret about the 2008 financial crisis, and it's not about his timing or his trades. The investor who famously shorted the housing market wishes he'd been more vocal about warning people what was coming between 2005 and 2007. Think of it as wanting to have been the canary in the coal mine, but louder.
That history lesson matters because it explains why Burry is now doubling down on his warnings about what he sees as an AI bubble, particularly around GPU depreciation at major tech companies. In a post on X Monday, he pointed to recent comments from Microsoft Corp. (MSFT) CEO Satya Nadella as evidence that his concerns about overstated earnings have merit.
Why Microsoft Is Nervous About Building Too Fast
Nadella's remarks, featured in Burry's latest newsletter, shed light on the tricky economics of massive data center investments. The Microsoft chief explained why the company has been cautious about scaling capacity tied to a single generation of NVIDIA Corp. (NVDA) GPUs.
The problem is straightforward: chip design is advancing so rapidly that infrastructure built for one GPU generation can quickly become inefficient. Power usage changes, cooling demands shift, and suddenly what seemed cutting-edge is outdated. "That means I don't want to build out a whole number of gigawatts that are only for a one-generation, one family," Nadella said.
He also addressed the elephant in the server room: overbuilding and depreciation concerns tied to Nvidia's accelerating product cycles. Microsoft plans to continue expanding capacity, but with more measured timing. "Do I really want to overbuild three and a half GW in 2027, or do I want to spread that in 2027–28," he said.
Burry's takeaway was succinct: Nadella "clearly is worried" about how much economic value evaporates as new Nvidia chips hit the market each year.
The Depreciation Debate Heats Up
For Burry, Nadella's comments validate his recent claims that hyperscalers are manipulating their financials by "understating depreciation." His argument is that companies like Meta Platforms Inc. (META) and Oracle Corp. (ORCL) are extending the useful life assumptions of chips and infrastructure assets, which makes current earnings look better than they should.
He's called this practice one of the "more common frauds of the modern era" and accused major hyperscalers of resorting to these accounting maneuvers.
Not everyone agrees with Burry's math. Steve Eisman, who shared screen time with Burry in "The Big Short," has pushed back on the depreciation calculations. Eisman's view is simpler: what ultimately matters is "the kind of returns and cost savings these massive investments will or won't bring."
The disagreement highlights a fundamental question about the AI infrastructure boom. Are companies building too much, too fast, with assets that will lose value quicker than their balance sheets suggest? Or is Burry being overly pessimistic about technology that will deliver genuine returns?
What's clear is that Burry learned something from 2008: if you think you see a bubble forming, speak up early and speak up often. Whether he's right this time remains to be seen, but he's determined not to stay quiet while the mine fills with gas.