"And while his bearish bets have made some AI and Mag Seven-heavy investors second-guess their high-tech AI bets, I do think that many may be at risk of discounting some of the man's previous words of warning. Even with his Substack and the numerous headlines going into depth on the moves he's made and his thoughts on various themes, specifically regarding the AI bubble, it still feels like some of his comments are being taken with a grain of salt by some."
"I do think that it's wise to take in what the man has to say, especially given his reputation, track record, and ability to take massive deep dives into the data that supports his theses. Though there have been a lot of Michael Burry headlines of late, I do think that there's one piece of commentary that investors might be at risk of forgetting about: the chip depreciation schedules among the big hyperscalers."
"Of course, if it does turn out that the big hyperscalers are overestimating the "useful life" of their hardware (think those pricey Nvidia ( NASDAQ:NVDA) GPUs), there could be a considerable financial hit to be taken on the chin later on. So, the big question is whether GPUs live two to three years or if four to six years is more appropriate, given hyperscalers might actually be able to stretch the life of such hardware."
Concerns focus on hyperscalers' chip depreciation schedules and the appropriate useful life for expensive AI GPUs. Overestimating useful life could create substantial future depreciation charges for mega-cap tech. The central accounting question is whether GPUs should be depreciated over two to three years or four to six years. Older GPUs can be repurposed and chips can be run with less strain to extend useful life. Uncertainty over useful-life assumptions could prompt clearer disclosure from hyperscalers and influence investor confidence in AI-heavy positions.
Read at 24/7 Wall St.
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