Michael Burry says Wall Street has been overstating tech earnings by 42% over the past decade, a fresh attack on the numbers behind one of the market’s most valuable corners. In a recent Substack post titled Cassandra Unchained, the investor known for calling the 2007-2008 housing crisis said his review of more than 1,000 annual reports from Nasdaq 100 companies showed a long-running accounting gap that has inflated profits on paper.
Burry said tech companies have improperly accounted for stock-based compensation for years, leaving Nasdaq 100 earnings from primary tech companies overstated by nearly 20%. He said shareholders see only 83.49 cents of every dollar of earnings per share that GAAP blesses, and argued that where there is money to be made, there is manipulation.
He singled out Meta, saying its owner earnings were overstated by about 20%, and named Datadog, Workday, Axon, Shopify, Palantir, Marvell, CrowdStrike and Zscaler as other companies he believes deserve scrutiny. He also said removing Tesla from the analysis cut the GAAP overstatement to 12.5% from about 20%.
The numbers sit in the middle of a market still being driven higher by the AI boom, even as fears of a bursting AI bubble rise with it. Burry has built a reputation for spotting potential excesses, and he has previously warned that AI hyperscalers are artificially boosting earnings by understating depreciation on their assets.
In his latest tally, Burry said 97 tech companies in the Nasdaq 100 reported $4.9 trillion in cumulative CAAP net income during the decade ending in fiscal 2025, while Wall Street analysts lifted that figure to $5.8 trillion by including stock-based compensation in their work. That left, he said, an earnings illusion of $1.7 trillion. The question now is whether investors treat the warning as another contrarian note from michael burry, or as a sign that the market’s most celebrated profits still need a harsher audit.