# Michael Burry Really F**K'd Up | AI Collapse Source: https://www.youtube.com/watch?v=ZFFGZhDe7no Recap page: https://rapidrecap.app/video/ZFFGZhDe7no Generated: 2025-11-12T02:07:06.357+00:00 --- ## Quick Overview Michael Burry's argument that AI chip demand will eventually collapse due to supply catching up and the end of the current depreciation cycle is fundamentally wrong because assets like chips and airplanes actually retain value or appreciate in certain market conditions, contrary to his expectation that they will plummet in value immediately after a recession or when new models are released. **Key Points:** - Michael Burry is criticized for suggesting AI chip demand will collapse, causing their value to plummet, similar to how he implied an asset like an airplane would. - The speaker argues that assets like GPUs and airplanes often retain or increase value, directly countering Burry's prediction that they would drop to zero value after three years. - The video shows a table detailing the 'Network/Compute Depreciation Useful Life (Years)' for companies like META, GOOGL, ORCL, and MSFT, where useful life is often shown increasing over time (e.g., META from 3 to 5 years). - The speaker points out that if 8-year-old chips still have 100% utilization, their value has not dropped, contradicting the idea that depreciation should be aggressive. - The speaker claims that companies like Meta, Oracle, and Microsoft are overstating their expenses by using long depreciation schedules for hardware, which inflates expenses and understates earnings. - The core counter-argument is that high demand keeps the value of high-utility assets like specialized chips constrained by supply, preventing the rapid value collapse Burry suggests. - The presenter was blocked by Michael Burry on X after leaving an eggplant emoji comment on one of Burry's posts. ![Screenshot at 0:15: The presenter holds up a model private jet to serve as a tangible analogy for Michael Burry's argument about asset depreciation and value collapse, specifically referencing the $13 million price tag.](https://ss.rapidrecap.app/screens/ZFFGZhDe7no/00-00-15.png) **Context:** The video analyzes and refutes recent comments made by investor Michael Burry, shared via his X (formerly Twitter) account, regarding the future value of AI chips and similar capital assets. Burry suggested that the immense demand for AI chips would eventually collapse, leading to a sharp drop in asset value, which the presenter uses an analogy of a private jet purchase to counter, arguing that high-utility assets often retain or appreciate in value, especially when supply is constrained. ## Detailed Analysis The presenter strongly disagrees with Michael Burry's prediction that the demand for AI chips will collapse, causing their value to plummet, similar to how he suggests a $13 million private jet's value would drop to zero after three years of use. The presenter uses the jet analogy to show that assets with high utility, like chips, often retain value or even appreciate, especially when supply is constrained, which is the current reality for AI hardware. The video displays a tweet from Cassandra Unchained showing a table on 'Network/Compute Depreciation Useful Life (Years)' for META, GOOGL, ORCL, and MSFT, indicating that these companies are already extending their assumed useful lives for hardware, suggesting they are overstating expenses and understating earnings. The speaker contends that if 8-year-old chips are still operating at 100% utilization, they have not lost value, proving Burry's prediction about immediate value collapse incorrect. The speaker concludes that the market dynamics for high-demand, high-utility assets like specialized chips are different from consumer goods like cars, and that demand falling off a cliff would not necessarily lead to zero value, especially if supply remains tight. ### Burry's Argument vs. Reality - Burry suggests AI chip demand will collapse, leading to zero value for old chips, using a $13M private jet analogy for 13 years of use - Speaker counters that assets like chips and planes retain value or appreciate due to high utility and constrained supply. ### Depreciation Accounting Critique - Companies like META, GOOGL, ORCL, and MSFT are accused of overstating expenses by extending depreciation useful lives (e.g., META 2020: 3 years, 2025: 5 years) - This inflates expenses and understates reported earnings. ### Market Dynamics - High demand for current AI chips contrasts with the idea that older models become worthless - If 8-year-old chips maintain 100% utilization, they retain significant value, invalidating Burry's depreciation model for this asset class. ### Personal Interaction - The presenter mentions being blocked by Michael Burry on X after leaving an eggplant emoji comment on one of his posts, which the presenter found humorous given the context of the debate. ![Screenshot at 0:15: The presenter holds up a model private jet to illustrate the concept of asset depreciation and value retention using a tangible example.](https://ss.rapidrecap.app/screens/ZFFGZhDe7no/00-00-15.png) ![Screenshot at 0:22: A screenshot of a news headline stating, "Google says TPU demand is outstripping supply, claims 8yr old hardware iterations have '100% utilization'" highlights the core topic of high demand for current tech.](https://ss.rapidrecap.app/screens/ZFFGZhDe7no/00-00-22.png) ![Screenshot at 0:34: The presenter emphatically gestures while questioning the premise of asset value plummeting, emphasizing the absurdity of Burry's claim.](https://ss.rapidrecap.app/screens/ZFFGZhDe7no/00-00-34.png) ![Screenshot at 1:04: The presenter holds the model jet close, emphasizing the physical example used to explain the depreciation argument.](https://ss.rapidrecap.app/screens/ZFFGZhDe7no/00-01-04.png) ![Screenshot at 2:31: A Twitter post screenshot displays a table titled 'Network/Compute Depreciation Useful Life \(Years\)' showing increasing useful lives for META, GOOGL, ORCL, and MSFT over time.](https://ss.rapidrecap.app/screens/ZFFGZhDe7no/00-02-31.png) ![Screenshot at 3:00: The presenter uses hand gestures to demonstrate the discrepancy between expected depreciation \(8 years\) and actual performance \(13+ years of use\).](https://ss.rapidrecap.app/screens/ZFFGZhDe7no/00-03-00.png) ![Screenshot at 4:02: The presenter points directly, contrasting the expected depreciation curve with the actual performance of current AI hardware.](https://ss.rapidrecap.app/screens/ZFFGZhDe7no/00-04-02.png) ![Screenshot at 6:10: The presenter uses wide hand gestures to illustrate the extreme divergence between Burry's prediction and reality regarding asset value.](https://ss.rapidrecap.app/screens/ZFFGZhDe7no/00-06-10.png) ![Screenshot at 9:27: A screenshot showing Michael Burry has blocked the presenter on X, highlighting the personal reaction to the critique.](https://ss.rapidrecap.app/screens/ZFFGZhDe7no/00-09-27.png) ![Screenshot at 11:14: A screenshot of a tweet from Michael Carven quoting the reason for the call today, John, is depreciation, setting up the core accounting debate.](https://ss.rapidrecap.app/screens/ZFFGZhDe7no/00-11-14.png)