Oracle Earnings Could Be Overstated by Up to 62% from AI Depreciation Tricks
Michael Burry slammed Big Tech's depreciation assumptions in AI hardware accounting for masking true AI costs and inflating profits by 24%. He estimates Oracle could overstate earnings by 48%–62% through extended server life cycles, potentially triggering a multibillion-dollar write-down.
1. Accounting Allegations by Michael Burry
Michael Burry accused major tech firms of extending AI hardware depreciation schedules to hide costs and boost reported profits by an average of 24%. He characterized these methods as aggressive accounting tactics that misrepresent the economic expense of servers and chips.
2. Oracle Corp Overstatement Estimates
Burry's analysis suggests Oracle could be overstating its earnings by 48% to 62% by treating AI servers as productive assets far beyond their realistic two-to-three-year lifecycle. This discrepancy implies that current profit figures may be inflated by billions of dollars.
3. Potential Multibillion-Dollar Write-Down
If Oracle adjusted depreciation to a realistic 2.5-year cycle, the company could face a substantial write-down, erasing reported profitability gains. Such a corrective adjustment would materially impact Oracle's balance sheet and investor valuation.