Burry Flags Alphabet’s 24% Profit Overstatement While Klarman Sells 41% Stake
Investor Michael Burry claims Alphabet is understating AI-chip depreciation to hide infrastructure costs, overstating earnings by about 24% and projecting a $226 billion asset overstatement through 2028. Meanwhile, Seth Klarman’s Baupost Group reduced its Alphabet stake by 41% in Q4 after a 65% surge and reinvested $500 million into Amazon.
1. Burry’s AI Depreciation Allegation
Michael Burry argued that Alphabet’s AI hardware depreciation schedules have been extended beyond realistic useful lives to defer roughly $X billion in costs, inflating reported profits by about 24% and potentially overstating assets by $226 billion through 2028.
2. Klarman’s Stake Reduction
In Q4 2025, Seth Klarman’s Baupost Group sold 41% of its Alphabet holding after a 65% share rally, freeing up $500 million that was reinvested into Amazon, signaling concerns over valuation multiples near 30x forward earnings.