Michael Burry's Criticism of Big Tech Earnings Quality: Depreciation Schedule Concerns

Michael Burry’s claims about Big Tech’s extended depreciation schedules (from 3-4 to 5-6 years for servers/GPUs) highlight potential earnings quality issues [1][3]. Meta’s 2025 change to 5.5-year useful life reduced depreciation by $2.9B [2]. Contrary to the criticism, the tech sector increased by 2.03% on November 14, 2025, with Microsoft (+2.4%), Alphabet (+1.84%), and Meta (+1.27%) gaining [0].

• Accounting vs. Sentiment
  : Burry’s concerns about inflated earnings contrast with the market’s focus on AI revenue growth.
• AI Capex Impact
  : Extended depreciation schedules may be a response to massive AI infrastructure investments.
• Regulatory Scrutiny Risk
  : The SEC could investigate these accounting practices if validated [0].

• Risks
  : Downward earnings revisions if Burry’s estimates are correct; high P/E ratios (MSFT:36x, AMZN:33x) increase correction vulnerability [0].
• Opportunities
  : Investors can monitor accounting policy changes for valuation adjustments.

• Burry’s estimates: $176B overstatement (2026-2028), Meta (21%), Oracle (27%) [1][3].
• Market reaction: Tech sector +2.03%, MSFT +2.4%, GOOGL +1.84% [0].
• Financial metrics: MSFT net margin (35.71%), GOOGL ROE (35%) [0].