What a difference a year makes in AI accounting
META•Alphabet, Amazon, Meta and Microsoft generally depreciate AI servers and equipment over five to six years, but shortening those estimates by one year could reduce their combined net income by about $36 billion in 2027 and imply nearly $800 billion in lost market capitalization.
1. Useful-life estimates
Alphabet, Amazon, Meta and Microsoft have generally extended the estimated useful life of graphics processing units and other data-center equipment to five or six years. Alphabet moved its server estimate from four years to six in 2023, while Meta changed its estimate for server and networking equipment to five to 5.5 years from four to five years.
2. Potential earnings impact
A calculator cited in the article estimates that reducing useful lives by one year could erase about $36 billion of combined net income from the four companies next year, potentially corresponding to nearly $800 billion in lost market capitalization at current valuation multiples. Longer estimates reduce the annual depreciation charge and increase reported income.
3. Amazon shortened estimates
Amazon shortened the estimated useful life for some servers and networking equipment to five years from six in 2025, citing faster technological development and obsolescence. The article says none of its major peers have followed suit, while Microsoft discloses a broad useful-life range of two to six years. Nvidia has announced a one-year rhythm for new chip generations, adding to questions about how long older equipment remains useful.
