Burry Warns Big Tech's $3 Trillion AI Commitments Could Squeeze Earnings

3 articles · Updated · Yahoo Finance · Aug 17

$3 trillion in off-balance-sheet commitments across nine tech giants has pushed Michael Burry to renew his AI warning, arguing companies could be stuck with costly infrastructure if demand falls short.
The obligations include $1.2 trillion in leases not yet started and $1.9 trillion in purchase commitments for chips, power and data centers, far above roughly $600 billion in capex over their latest 12-month periods.
Burry says the risk extends to accounting: hyperscalers allegedly depreciate AI chips and servers over five to six years even though their economic life may be only two or three, suppressing expenses by an estimated $176 billion from 2026 to 2028.
Alphabet reported $811 billion in purchase and contractual commitments and Meta $347 billion in future leases, while Burry also warns circular financing among hyperscalers, AI labs and chipmakers may be propping up demand.
The renewed critique follows Burry's broader bubble calls this week, when he likened the AI boom to the dot-com era as the CAPE ratio approached its 1999 peak.