Tech giants might be faking their profits by pretending AI chips last ten years when they actually die in two.
March 26, 2026
Original Paper
The AI Chip Depreciation Debate
SSRN · 6459645
The Takeaway
By extending depreciation schedules on expensive AI hardware, companies can hide the true cost of their infrastructure from investors. This 'depreciation debate' suggests that a significant portion of current AI profits might be an accounting illusion caused by the mismatch between the physical life and the economic utility of silicon.
From the abstract
In November 2025, hedge-fund manager Michael Burry, whose bet against subprime mortgages was dramatized in the 2015 movie The Big Short, accused the major technology companies of inflating earnings by extending depreciation schedules on AI hardware, calling it “one of the more common frauds of the modern era.” The case places students in the role of an analyst at an AI-focused investment fund who must evaluate Burry's thesis and prepare the fund's response to nervous investors. Prepari