Michael Burry's Critique of Big Tech Earnings Quality: Depreciation Practices & Market Impact

Michael Burry’s critique of Big Tech earnings quality centers on extended depreciation schedules for servers and GPUs, which reduce non-cash charges and boost net income [1][2]. Key claims include:

• $176 billion in understated depreciation for Big Tech (2026–2028) [2]
• Meta’s earnings inflated by 20.8% and Oracle’s by 26.9% via these practices [2]

Contrary to the bearish critique, most targeted stocks rose on the event day (2025-11-14):

• Meta (META): +1.27% (volume:20.68M shares) [0]
• Microsoft (MSFT): +2.4% (28.49M shares) [0]
• Alphabet (GOOGL): +1.84% (31.11M shares) [0]
• Oracle (ORCL): +5.7% (35.64M shares) [0]
• Amazon (AMZN): -0.16% (38.88M shares) [0]

The Technology sector gained 2.03% that day [0]. Positive market reaction was offset by news: Meta received an analyst upgrade (Hold→Buy, target $800) [0], and Microsoft’s OpenAI partnership restructuring boosted confidence [0].

1. Accounting vs. Market Perception
   : Burry’s accounting-focused critique clashed with market optimism driven by AI growth and short-term positive news.
2. AI Capex & Depreciation
   : Big Tech’s massive AI capex contrasts with extended depreciation schedules, raising asset obsolescence risks.
3. Mag7 Earnings Debate
   : Projected 27% YoY Mag7 earnings growth sparks debate over genuine growth vs. accounting adjustments [1].

• Earnings Quality
  : Extended depreciation may lead to unexpected write-downs if AI hardware becomes obsolete faster than estimated [2].
• Transparency
  : Concerns over accounting practices highlight the need for greater asset useful life estimate transparency [1].

• Monitor companies’ future depreciation policy disclosures and asset write-downs.
• Track analyst adjustments to earnings estimates incorporating Burry’s claims.

• Burry’s critique focuses on Big Tech’s depreciation practices inflating earnings, with specific estimates for Meta and Oracle.
• Most targeted stocks rose on event day due to offsetting positive news, despite the critique.
• Information gaps include missing data on Apple/Tesla/Nvidia (Mag7 members), Oracle’s 5.7% surge reason, and detailed financial statements.