Meta Platforms Allegedly Inflates AI Profitability by Over 20% Through Depreciation Gimmick
Michael Burry alleges Meta Platforms understates depreciation on AI hardware by extending chip lifespans, inflating profitability by over 20%. He warns that such practices could inflate cumulative asset values by $226 billion through 2028 and lead to material write-offs nearing $50 billion.
1. Burry’s Sinister Depreciation Claims
Michael Burry posted that Meta extends the useful life of AI chips and servers well beyond industry norms, understating depreciation to shield current earnings. He labeled this tactic a ‘sinister’ accounting maneuver to conceal true infrastructure costs.
2. 20%+ Earnings Overstatement
Burry’s analysis indicates that if Meta applied a realistic 2.5-year depreciation schedule for AI hardware, its reported profit would collapse, suggesting an earnings inflation north of 20%. This implies that disclosed margins may not reflect underlying economic performance.
3. Asset Overstatement and Potential Write-offs
The investor projects that hyperscalers, including Meta, could cumulatively overstate assets by $226 billion through 2028. He warns that eventual write-offs of around $50 billion would pose significant risks to long-term asset quality.