Michael Burry has wagered that the AI boom is headed for a painful collapse — but former Alphabet Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL) executive David Friedberg insists the famed investor is wrong.
Burry Makes A Massive Bet Against AI Highfliers
Burry, known for predicting the 2008 housing crash, earlier this month placed more than $1 billion in put options against two of the biggest winners of the AI boom: chipmaker Nvidia Corp (NASDAQ:NVDA) and software firm Palantir Technologies (NASDAQ:PLTR).
Burry's underlying message: the AI sector is inflated, overhyped and vulnerable to a dramatic correction.
Friedberg Pushes Back, Saying Burry's Math Is Wrong
However, on Tuesday, the All-In Podcast posted a video in which Friedberg, an early Alphabet executive and current entrepreneur, challenged Burry's assumptions.
"I actually think Michael Burry’s got this wrong," Friedberg said in the video, citing the investor’s statements that hyperscalers like Google, Amazon.com, Inc. (NASDAQ:AMZN) and Microsoft Corp (NASDAQ:MSFT) are inflating earnings by extending the depreciation timelines of their data center equipment.
He said that Burry alleges these companies are making profits look stronger by doubling the "useful life" of servers and networking gear, but the changes reflect the real evolution of data centers.
Why Data Center Economics Have Changed
Friedberg explained that modern data centers are no longer dominated by storage hardware such as hard drives. With the rise of AI, they are now processing centers, where GPUs and TPUs do the heavy lifting.
He said industry checks show 7- to 8-year-old chips are still operating at full utilization, supporting Google's decision — starting in 2021 — to extend server and networking equipment life from 3 to 4 years, then 5 to 6 years.
"That actually justifies and validates the depreciation schedule being much longer versus shorter," Frideberg stated.
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Palantir And Nvidia Continue Explosive Market Run
Earlier this month, Palantir posted $1.18 billion in third-quarter revenue, topping analyst expectations of $1.09 billion. The AI software firm also reported adjusted earnings of 21 cents per share, exceeding the 17 cents per share that analysts projected.
In October 2025, Nvidia made history by becoming the first company to top a $5 trillion market valuation, and it currently holds a market cap of $4.41 trillion. Meanwhile, Palantir has reached $398.65 billion in market capitalization.
Nvidia shares are up 31.13% year to date, while Palantir has surged 122.54% over the same period, according to Benzinga Pro.
Nvidia Poised For Another Standout Quarter
Nvidia is once again expected to act as a major indicator for both the market and the broader tech sector when it reports its third-quarter results on Wednesday after the closing bell.
Analysts anticipate revenue of $54.84 billion for the quarter, up sharply from $35.08 billion a year ago. Nvidia previously guided third-quarter revenue in the range of $52.92 billion to $55.08 billion.
The chipmaker also continues to outperform most of its industry, ranking in the 98th percentile for Growth and the 92nd percentile for Quality in Benzinga's Edge Stock Rankings. Click here to see how it compares to its competitors.
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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
