Michael Burry’s Big AI Warning: Boom or Mirage?

First Things First

Below is an excerpt from the full weekly market outlook we shared yesterday inside our Skool Community.

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Michael Burry Sounds the Alarm:

Is the AI Boom Built on Sand?

In 2008, he saw the crash coming before anyone else.

Today, Michael Burry is raising another red flag: this time over the AI boom that’s driven tech stocks to historic highs and created trillion-dollar giants.

His thesis?
This rally might be built on accounting smoke and mirrors: a mirage of profits that could vanish as soon as 2026–2027.

If he’s right, today’s AI darlings could become tomorrow’s subprime CDOs.

The Warning: Artificially Inflated Profits

Burry highlights a clever (but risky) accounting trick:

🔻 Big Tech firms like Meta, Microsoft, Oracle, and Google are extending the useful life of their AI hardware, from 3 years to 5 or even 6.

Why?
To reduce depreciation expenses and make profits look bigger.

Instead of writing down $30M per year over 3 years for a $90M server…
They now write down just $15M per year over 6 years.

Multiply that across thousands of servers and suddenly:

• Oracle’s profits may be 27% overstated

• Meta’s profits may be 21% overstated

• And $176 billion in phantom earnings could be floating around between 2026–2028.

This is what Burry calls "profit inflation", and he warns it's one of the most dangerous forms of financial illusion today.

But What If This Time Is Different?

The counterargument is simple:

📌 What if this isn’t fraud, but justified accounting?

Today’s AI hardware might actually last longer:

• 🔁 In an era of GPU scarcity, nothing is wasted. Older chips are still useful for lighter workloads.

• 🧊 Cooling and software improvements are extending server life.

• 🧮 AI infrastructure is additive: old chips aren't replaced, they're stacked.

In that case, 5–6 years of depreciation isn’t manipulation, it’s accurate.

Even more important: This AI boom is politically and economically protected.

We’re not talking about a dot-com-style hype cycle.
We’re talking about national AI strategies, trillion-dollar public–private alliances, and an all-in race with China.

OpenAI, Uncle Sam, and the $500B Stargate

Consider:

• 🇺🇸 The U.S. government is openly supporting AI as a national priority.

• 💰 SoftBank’s Masayoshi Son just sold $5.8B of Nvidia stock: not to exit AI, but to double down on OpenAI and a $500B AI data center project called Stargate.

• 🏛️ When OpenAI’s CEO asked for $1T in funding, the government didn’t laugh, they invited him to the White House.

This isn’t Pets.com.
It’s the Manhattan Project, with chips.

And when governments are underwriting the infrastructure, the rules of boom-and-bust cycles… change.

So What Should You Do?

You don’t have to pick sides between:

• “It’s a fraud” (Burry)

• or “It’s the future” (Wall Street + D.C.)

The truth is more nuanced.

🚨 There is a risk of profit compression if amortization timelines shorten again.
✅ But there’s also historic capital flowing into the physical AI layer: data centers, GPU infrastructure, tokenized compute layers, and AI-aligned crypto protocols.

Your Move

Here’s how we’re positioning at Swiss Islamic Finance:

1. We’re cautious on AI megacaps at peak multiples.
   —> Their valuation rests on high growth + accounting assumptions. Both could shift.

2. We’re rotating into the underpriced layer beneath the AI boom:
   —> DePIN, GPU-tokenization, cloud infra, L2 compute scaling.

3. We’re watching 2026–2027: that’s when the “hardware refresh cycle” will hit balance sheets, and Burry’s theory will be tested.

The Real Alpha?

It’s in the hidden rails of this AI explosion.

If physical AI infrastructure is the true play of this cycle…
Then the crypto layer powering that infrastructure is still trading at a discount.

Want exposure to the asymmetric side of this thesis?

The next few years will make and break fortunes.

Michael Burry might be early, or right.
But either way, this isn’t a market to sleep on.

Stay lucid. Stay positioned. And as always, stay halal.

—Stay lucid. Stay positioned. And as always — stay halal.
Saâd
from Swiss Islamic Finance

Invite Your Friends

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