The Big Short In the current state of the economy there is a lack of trust in individuals. Earlier this week, it was revealed that Michael Burry, whom Adam McKay famously portrayed as Christian Bale in his 2008 housing crisis, is closing the doors to his hedge fund Scion Capital because he believes the market has become completely disconnected from fundamentals.
“My estimate of the value in the securities is not in line with the market now and has been for some time,” he wrote in a letter dated October 27 informing his investors of his plan to liquidate the fund. The move comes shortly after Barry publicly shared that his positions were short against Trump administration-aligned defense tech firm and surveillance-state facilitator Palantir and chip giant Nvidia. On
Barry came out of hibernation last month to talk about what he considers a bubble in the AI field, about which he’s certainly not alone in sounding the alarm. But Barry has a new perspective on the matter: He believes companies are settling accounts by rigging the depreciation schedules of their chipsets, calling it “one of the most common frauds of the modern era.” Barry’s math is basically that hyperscalers like Oracle, Meta, Google and others are claiming that the useful lifetimes of their technology are five to six years, when in his estimation, they’re actually closer to two to three years.
Apparently this led him to the conclusion that he ultimately had to close Scion Capital: “Sometimes, we see bubbles. Sometimes, something has to be done about it. Sometimes, the only winning move is not to play.”
The depreciation tables are a slightly odd observation, but have significant implications if Bury is correct. He shared a chart that shows these companies’ earnings will exceed $176 billion between 2026 and 2028, with companies like Oracle and Meta growing more than 20% from their actual earnings. He is not alone in this observation. Another short seller, Jim Chanos, pointed to cloud-based GPU provider CoreWave as a prime example of the depression trick, claiming the company is barely profitable with a more accurate depression timeline.
Whenever a short seller shares such information, they face skepticism about their motivations. For example, Palantir CEO Alex Karp took some jabs at Barry’s position against his company, saying, “As far as I can tell, the two companies he’s shorting are the ones making all the money, which is very strange,” and arguing, “The idea that chips and ontology is what you want to short is bullshit madness.”
But they’re not the only ones who are starting to raise questions about how these AI companies, which are constantly gobbling up investors’ funds and garnering massive valuations, will actually make money. The source news reported that investors asked OpenAI’s Chief Financial Officer, Sarah Fryer, on a private call why the company’s growth seemed to be slowing, which she ultimately attributed to the decreasing time users spend with ChatGPT following stronger content restrictions.
It’s not clear that “we’re building an erotica bot to maximize user engagement” is something the marketplace should facilitate.