Jim Morrow characterizes the AI-investment boom as a crowded trade destined to unwind slowly then all at once. Michael Burry warns that Big Tech's AI-era profits rely on overstretched depreciation schedules, calling the practice a common modern fraud. Burry estimated that Big Tech will understate depreciation by $176 billion between 2026 and 2028, inflating reported profits by 26.9% at Oracle and 20.8% at Meta. Burry deregistered Scion Asset Management, stepping away from outside money and disclosures, and suggested the financial cycle around GPUs, data centers, and trillion-dollar AI bets is distorted, crowded, and fragile.
""It'll happen slowly, and then all at once." That's how Jim Morrow, founder and chief investment officer of Callodine Capital, describes the eventual - inevitable - unwinding of what he calls "the most crowded trade in history." Of course, he isn't just paraphrasing Ernest Hemingway -he's talking about the AI race, and the trillion-dollar deals so overstretched they're better described as knots than trades. And he's not alone in sounding alarms."
"Michael Burry-the investor of Big Short fame who famously predicted the 2008 housing collapse-broke a two-year silence this week to say nearly the same thing: that Big Tech's AI-era profits are built on "one of the most common frauds in the modern era"-stretching the depreciation schedule (some, including Burry, would say cheating the depreciation schedule). And it landed with extra weight: earlier this week, Burry quietly deregistered his investing firm, Scion Asset Management, effectively stepping away from managing outside money or filing public disclosures."
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