The Accounting Uproar Over How Fast an AI Chip Depreciates

Tech giants including Meta, Alphabet, Microsoft and Amazon have all extended the estimated useful lives of their servers and AI equipment over the past five years, sparking a debate among investors about whether these accounting changes are artificially inflating profits. Meta this year increased its depreciation timeline for most servers and network assets to 5.5 years, up from four to five years previously and as little as three years in 2020. The company said the change reduced its depreciation expense by $2.3 billion for the first nine months of 2025. Alphabet and Microsoft now use six-year periods, up from three in 2020. Amazon extended to six years by 2024 but cut back to five years this year for some servers and networking equipment.

Michael Burry, the investor portrayed in 'The Big Short,' called extending useful lives 'one of the more common frauds of the modern era' in an article last month. Meta's total depreciation expense for the nine-month period was almost $13 billion against pretax profit exceeding $60 billion.

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