No. of Recommendations: 20
Famed investor Michael Burry on Saturday ignited a fresh debate over the sustainability of the artificial-intelligence boom, questioning whether tech giants’ massive data center spending can continue without damaging balance sheets and earnings.
A question I have for (ORCL), (GOOG), (META), (MSFT), (AMZN), (NVDA), (CAT), and all the rest, ‘When does the spending for AI data center buildout actually end?’” Burry wrote on X. “It is consuming all your cash flow, you are borrowing, you are financing in ways you never have, apparently because it is so urgent, because it scales? But if it scales, when does it end?”
He added: “Now you are engaging in accounting tricks to hide expense, to protect earnings, as the impact is so severe. You will be tortuously adjusting your earnings in a new and sinister ways. When does it end?”
The comments drew a detailed rebuttal from Aakash Gupta, a technology newsletter writer with more than 200,000 subscribers, who suggested Burry’s argument centers on depreciation accounting and the pace of capital expenditures.
Gupta laid out what he described as the financial backdrop: “The Big Four hyperscalers just guided $650-700 billion in combined 2026 capex, a 60%+ increase from the $381 billion they spent in 2025.” He noted that “Amazon alone committed $200 billion, so far above the $146 billion consensus that the stock lost $450 billion in market cap over nine straight sessions.”
Amazon is projected to go negative FCF in 2026, somewhere between -$17 billion (Morgan Stanley) and -$28 billion (BofA). Alphabet’s free cash flow is expected to collapse 90%, from $73.3 billion to $8.2 billion,” he wrote, adding that major tech firms “raised $108 billion in bonds in 2025 alone” and that “JP Morgan projects $1.5 trillion in tech debt issuance ahead.”
https://seekingalpha.com/news/4554933-burry-sparks...There may be many more falling knives in future if AI capital spending boom doesn’t produce the windfall the major tech firms expect.
