The accounting uproar over how fast an AI chip depreciates

Subscribe to enjoy similar stories. A debate is raging over the accounting treatment of Nvidia chips and other equipment that tech companies are splurging on. This time, some of the AI companies’ critics may be overreaching.

Rarely have investors obsessed over a topic as seemingly banal as the proper depreciation schedule for fixed assets. But when spending on artificial-intelligence infrastructure is in the hundreds of billions of dollars at a handful of the world’s biggest companies, the market pays attention. Michael Burry, the famed investment manager played by Christian Bale in 2015’s film “The Big Short," recently added fuel to the fire.

“Extending useful life decreases depreciation expense and increases apparent profits," he wrote in an article last month. “It is one of the more common frauds of the modern era and results in overvalued assets and overstated profits." Whatever the merits of that criticism, some perspective is in order. This year, for instance, Meta Platforms increased the estimated useful lives for most of its servers and network assets to 5.5 years.

It previously said it used a range of four to five years. As recently as 2020, Meta said it used as little as three years. Meta said the latest extension reduced its depreciation expense by $2.3 billion for the first nine months of 2025.

That isn’t a small number. But to grasp the scale, its total depreciation expense was almost $13 billion, while pretax profit topped $60 billion. Alphabet, Microsoft and Amazon.com also use longer useful lives for similar assets than they did five years ago.