Microsoft $MSFT ( ▼ 0.74% ) just offered fresh ammo against the AI bubble bear case, including arguments made by investor Michael Burry that tech companies are understating how quickly expensive GPUs lose value.
GPUs already sold, not sitting idle
On its earnings call, Microsoft’s CFO said most of the GPUs the company is buying are already contracted for the bulk of their useful lives. In other words, the company is not just betting demand will show up later — much of the revenue tied to those chips is already locked in.
That challenges the idea that AI hardware will rapidly depreciate without generating enough income to justify the massive upfront spending.
Good news for AI infrastructure players
This is encouraging not just for Microsoft, but for other AI infrastructure providers whose business models depend heavily on keeping expensive chips utilized. It also lines up with commentary from companies like CoreWeave $CRWV, which has said customers are renewing GPU contracts at prices close to original rates.
If GPUs continue holding their economic value longer than skeptics expect, the math behind AI infrastructure investments looks a lot sturdier.
The concentration risk
There is, however, a catch. A large portion of Microsoft’s contracted AI demand is tied to OpenAI. That means the strength of these long-term agreements depends heavily on one major customer’s growth and financial health.
So while Microsoft’s comments ease fears about rapid GPU value decay, they also highlight a different risk: just how dependent parts of the AI ecosystem have become on a handful of dominant players.