The Big Short investor Michael Burry once again took aim at hyperscalers’ massive AI data center investments in an X post on Saturday, February 21. He targeted Oracle ORCL +1.20% ▲ , Alphabet GOOGL +0.64% ▲ , Meta META +2.25% ▲ , Microsoft MSFT +2.98% ▲ , Amazon AMZN +1.00% ▲ , and Nvidia NVDA +1.41% ▲ , asking: “When does the spending for AI data center buildout actually end?”
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The post reignited debates on the sustainability of AI capital expenditures (capex). According to company guidance, the top four hyperscalers (AMZN, GOOGL, META, MSFT) are projected to spend a total of $650 to $700 billion in 2026, a more than 70% jump from $381 billion in 2025.
Burry argued these investments are consuming cash flows and forcing companies to borrow more despite strong balance sheets. He noted that companies are borrowing and funding the capex in novel ways because they seem “urgent and could scale.” But Burry is more concerned about when the spending spree will stop.
Burry Criticizes Big Tech’s Accounting Practices
Burry warns that firms like Nvidia and Meta could employ accounting tricks to hide rising costs and depreciation. Under pressure, they could restate earnings or see profits drop, ultimately hurting investor trust. He estimates $176 billion in understated depreciation across hyperscalers from 2026-2028.
For context, Burry forecasts Amazon to generate negative free cash flow in 2026, between -$17 billion and -$28 billion. Alphabet’s free cash flow could drop 90%, from $73.3 billion to $8.2 billion, reflecting growing financial strain amid AI buildouts.
Burry Compares AI Hype to Past Bubbles
Burry compared the ongoing AI hype to the 1920s radio boom, where technology advanced for decades but RCA stock cratered 98% in the 1930s Depression. He also draws parallels to the 2000 dot-com era, when data center hype peaked before the Nasdaq fell 78% by 2002. He acknowledged his own forecasting errors but warns the AI bubble could burst the same way.
Which Is the Best AI Stock, According to Analysts?
Using the TipRanks Stock Comparison Tool for the Best Artificial Intelligence Stocks, we determined that analysts have currently assigned a “Strong Buy” consensus rating to most of these stocks, except Apple AAPL +0.77% ▲ , IBM IBM +3.58% ▲ , and C3.ai AI +1.88% ▲ . Out of these, MSFT shares offer the highest upside potential over the next twelve months.
