Big Tech's AI Spending Binge Could Lead to Massive Write-Offs in Two Years

Michael Burry is sounding the alarm over Big Tech's AI spending, warning of potential massive write-offs in two years. In his latest blog post, he compared the current AI boom to previous capital-cycle bubbles, including the dot-com era. Burry notes that net capital investment has reached 2.07% of GDP, the highest level in four decades outside the aftermath of the March 2000 Nasdaq peak.

Burry is concerned about how much of Big Tech's spending is being financed through leases and other commitments that do not immediately appear as conventional capital expenditure or debt. He estimates that Alphabet has nearly $900 billion in off-balance-sheet commitments and exposures, while Amazon's uncommenced leases and purchase commitments surged 81% in nine months to about $267 billion.

Burry also questioned Oracle's accounting around customer prepayments, highlighting an $11.4 billion operating-cash-flow item tied to customers with significant financing components. He argues that massive spending itself does not guarantee a durable competitive advantage and urges investors to wait for more attractive opportunities rather than chase the AI boom.