Michael Burry, the hedge fund manager who made a fortune betting against the housing market before it imploded in 2008, is sounding the alarm again. This time, his target is the AI-fueled rally in Big Tech stocks, which he believes is propped up by aggressive accounting practices and built on data center infrastructure that nobody has figured out how to fully monetize.

His advice to investors is disarmingly simple: reduce your tech exposure. Or, as he put it himself, “Sometimes, the only winning move is not to play.”

The depreciation trick hiding in plain sight

Since 2020, companies like Meta and Google have extended the depreciation lifespans of their AI servers significantly, telling investors their expensive AI chips and servers will last longer than they used to claim, which means they book less cost per year, which means profits look fatter than they actually are.

Burry’s analysis suggests this accounting shift could understate collective depreciation by as much as $176 billion between 2026 and 2028, artificially inflating profits by roughly 20% across these companies.

The Cisco parallel

Burry has drawn a direct comparison between Nvidia’s current position and Cisco Systems during the dot-com bubble. In the late 1990s, Cisco was the company building the internet’s backbone. Cisco’s stock peaked in March 2000 at a market cap that briefly made it the most valuable company on Earth. Then the music stopped. The stock fell more than 80% and, more than two decades later, still hasn’t recovered to its dot-com highs.

Burry has warned of a “major top” in the AI rally, pointing to overbuilt data centers and insufficient consumer and enterprise demand to justify the buildout. He sees potential price drops of 40% to 50% for major Big Tech stocks as market conditions shift.

What Burry is actually doing

In November 2025, he placed bets against major AI stocks. He later closed his fund, and his March 2026 warning indicated potential market dislocation and significant price drops ahead.

He’s not telling people to short these stocks. Burry has cautioned against shorting amid ongoing momentum, acknowledging that the rally could persist in the near term even if the fundamentals don’t support current valuations.