Investor Michael Burry has doubled down on his claims regarding GPU depreciation at leading hyperscalers and AI companies, citing recent remarks by Microsoft Corp. (NASDAQ:MSFT) CEO Satya Nadella, who highlighted the complex economics of large-scale data center investments.
Burry Regrets Not Being More Vocal In 2008
On Monday, in a post on X, Burry, who rose to prominence for shorting the housing market ahead of the 2008 financial crisis, said that he regrets not warning others more effectively about the risks building between 2005 and 2007, adding that this experience has shaped his decision to speak more openly on the current AI bubble.
The post featuring a snapshot of his latest newsletter draws attention to Nadella’s response during a recent interview in which the Microsoft chief discussed why the company has been cautious about scaling data center capacity tied to a single generation of NVIDIA Corp. (NASDAQ:NVDA) GPUs.
He said this is due to the rapid advances in chip design, which come with differences in power usage and cooling demands, quickly rendering older infrastructure less efficient.
Nadella said that these factors were key in Microsoft's planning, while warning that infrastructure designed for a single GPU generation could quickly lose efficiency. “That means I don't want to build out a whole number of gigawatts that are only for a one-generation, one family,” he said.
He also addressed concerns about overbuilding and depreciation tied to the accelerating pace of Nvidia's product cycles, while noting that Microsoft will continue to ramp up its capacity, but at a more measured approach going forward. “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 summarized Nadella’s comments, saying, “he clearly is worried” about the economic value that is lost in quick succession as new Nvidia chips enter the market each year.
Burry Doubles-Down On Depreciation Claims
Burry tied Nadella’s comments to his own recent claims regarding overstated earnings and “understating depreciation” by extending the useful life of assets such as chips and their surrounding infrastructure by hyperscalers such as Meta Platforms Inc. (NASDAQ:META) and Oracle Corp. (NYSE:ORCL).
He had called this one of the “more common frauds of the modern era,” and had accused the hyperscalers of resorting to such practices.
Investor Steve Eisman, who was featured alongside Burry in the 2015 movie “The Big Short,” has disagreed with his depreciation math, saying that ultimately what matters is the “kind of returns and cost savings these massive investments will or won't bring.”
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