Burry Sounds Alarm: Big Tech's AI Spending Boom May Lead to Massive Write-Offs in Two Years

Investor Michael Burry has sounded an alarm on the massive spending by Big Tech companies in AI infrastructure, warning of potential write-offs in two years. In a recent blog post, Burry compared the current AI spending boom to past capital-cycle bubbles, citing the dot-com era as an example.

Burry pointed out that hyperscalers are building up enormous financial commitments through leases and purchase obligations that do not immediately appear on their balance sheets. He estimates Alphabet has nearly $900 billion in off-balance-sheet commitments and exposures, while Meta has roughly $700 billion in uncommenced leases and purchase obligations.

Burry also expressed concerns about Microsoft's accounting treatment of its data-center buildout, which he believes allows the company to shift spending toward operating leases and reduce reported capital expenditure. He noted that Amazon's financial position is becoming increasingly leveraged as free cash flow turns negative.