GPU Depreciation Schedules vs Resale Value

Oct 27, 202610 min read

Most public companies that own GPU servers depreciate them over five to six years. On a $1 billion fleet, six years instead of four adds about $83 million a year to pre-tax income.

Against our published residual bands, a six-year schedule is aggressive but defensible: it tracks the moderate band and never exceeds it. Five years tracks the conservative band. Four years writes GPUs below what buyers pay.^{[1]American Compute, "GPU Residual Value: Underwriting a $3 Trillion Opportunity," Exhibits 7 and 15 (June 2026)https://www.amcompute.com/blog/gpu-depreciation-residual-value-report-2026}

What useful life companies assume

Microsoft, Alphabet, Oracle and CoreWeave use six years.^{[2]Microsoft, Form 10-K for fiscal 2026, property and equipment (filed July 29, 2026)https://www.sec.gov/Archives/edgar/data/789019/000119312526323660/msft-20260630.htm}^{[3]Alphabet, Form 10-K for 2025, property and equipment (filed February 5, 2026)https://www.sec.gov/Archives/edgar/data/1652044/000165204426000018/goog-20251231.htm}^{[4]Oracle, Form 10-K for fiscal 2026, property and equipment (filed June 22, 2026)https://www.sec.gov/Archives/edgar/data/1341439/000119312526277521/orcl-20260531.htm}^{[5]CoreWeave, Form 10-K for 2025, property and equipment note (filed March 2, 2026)https://www.sec.gov/Archives/edgar/data/1769628/000176962826000104/crwv-20251231.htm} Meta uses 5.5.^{[6]Meta Platforms, Form 10-K for 2025, change in accounting estimate (filed January 29, 2026)https://www.sec.gov/Archives/edgar/data/1326801/000162828026003942/meta-20251231.htm} Nebius and IREN use five, as does Amazon for a subset of servers, per filings as of October 2026.^{[7]Nebius Group, Form 6-K Exhibit 99.2: interim financial statements for the six months ended June 30, 2026 (August 12, 2026)https://www.sec.gov/Archives/edgar/data/1513845/000110465926094844/nbis-20260812xex99d2.htm}^{[8]IREN Limited, Form 10-K for fiscal 2026, property, plant and equipment (filed August 27, 2026)https://www.sec.gov/Archives/edgar/data/1878848/000187884826000052/iren-20260630.htm}^{[9]Amazon.com, Form 10-K for 2024, property and equipment note (filed February 7, 2025)https://www.sec.gov/Archives/edgar/data/1018724/000101872425000004/amzn-20241231.htm}

The schedules moved one way for most of a decade. Amazon went from three years for servers before 2020^{[10]Amazon.com, Form 10-K for 2020, change in estimated useful life of servershttps://www.sec.gov/Archives/edgar/data/1018724/000101872421000004/amzn-20201231.htm} to six in 2024, then cut a subset back to five on January 1, 2025, citing the "increased pace of technology development, particularly in the area of artificial intelligence and machine learning."^{[9]Amazon.com, Form 10-K for 2024, property and equipment note (filed February 7, 2025)https://www.sec.gov/Archives/edgar/data/1018724/000101872425000004/amzn-20241231.htm} Nebius went the other way in January 2026, from four years to five, to reflect "usage patterns and current utilization commitments."^{[7]Nebius Group, Form 6-K Exhibit 99.2: interim financial statements for the six months ended June 30, 2026 (August 12, 2026)https://www.sec.gov/Archives/edgar/data/1513845/000110465926094844/nbis-20260812xex99d2.htm}

The full list of filers, with every change since 2020 and its disclosed effect, is in our GPU depreciation schedules tracker.

How the schedule moves earnings

A longer life spreads the same cost over more years, so each year's depreciation expense falls and operating income rises by the same amount. Cash does not change.

Useful life	Annual depreciation	Book value after 3 years	After 5 years
3 years	$333M	$0M	$0M
4 years	$250M	$250M	$0M
5 years	$200M	$400M	$0M
6 years	$167M	$500M	$167M

Straight line, no salvage value, $1 billion of equipment placed in service on day one.

The disclosed effects are in the billions. Microsoft said its move from four to six years added $3.7 billion to fiscal 2023 operating income.^{[11]Microsoft, Form 10-K for fiscal 2023, change in accounting estimate (filed July 27, 2023)https://www.sec.gov/Archives/edgar/data/789019/000095017023035122/msft-20230630.htm} Meta said its 2025 move to 5.5 years cut that year's depreciation by $2.92 billion.^{[6]Meta Platforms, Form 10-K for 2025, change in accounting estimate (filed January 29, 2026)https://www.sec.gov/Archives/edgar/data/1326801/000162828026003942/meta-20251231.htm} Amazon's cut to five years added $1.4 billion of depreciation in 2025.^{[12]Amazon.com, Form 10-K for 2025, property and equipment note (filed February 6, 2026)https://www.sec.gov/Archives/edgar/data/1018724/000101872426000004/amzn-20251231.htm}

CoreWeave's technology equipment stood at $20.9 billion at the end of 2025 and $33.8 billion by June 30, 2026.^{[13]CoreWeave, Form 10-Q for the quarter ended June 30, 2026 (filed August 12, 2026)https://www.sec.gov/Archives/edgar/data/1769628/000176962826000366/crwv-20260630.htm} On the year-end balance, a five-year life instead of six would add about $0.7 billion of depreciation a year.

Is six years too long for a GPU

Michael Burry says yes. On November 10, 2025 he posted that hyperscalers understate depreciation by extending useful lives while buying NVIDIA chips on a two- to three-year product cycle, and put the understatement at about $176 billion from 2026 to 2028.^{[14]CNBC, "Big Short investor Michael Burry accuses AI hyperscalers of artificially boosting earnings" (November 11, 2025)https://www.cnbc.com/2025/11/11/big-short-investor-michael-burry-accuses-ai-hyperscalers-of-artificially-boosting-earnings.html} He expanded the case on his Substack on November 26, 2025.^{[15]Michael Burry, "Unicorns and Cockroaches: [Blessed Fraud]," Cassandra Unchained (November 26, 2025)https://michaeljburry.substack.com/p/unicorns-and-cockroaches-blessed}

Date	Who	Position
Oct 15, 2025	Princeton CITP	Realistic GPU life is closer to one to three years than the five to six booked^{[16]Mihir Kshirsagar, "Lifespan of AI chips: the $300 billion question," Princeton CITP blog (October 15, 2025)https://blog.citp.princeton.edu/2025/10/15/lifespan-of-ai-chips-the-300-billion-question/}
Nov 10, 2025	Michael Burry	Extended lives understate 2026-2028 depreciation by about $176B^{[14]CNBC, "Big Short investor Michael Burry accuses AI hyperscalers of artificially boosting earnings" (November 11, 2025)https://www.cnbc.com/2025/11/11/big-short-investor-michael-burry-accuses-ai-hyperscalers-of-artificially-boosting-earnings.html}
Nov 12, 2025	Satya Nadella, Microsoft	Did not want to be "stuck for four or five years of depreciation on one generation"^{[17]Dwarkesh Patel, interview with Satya Nadella, transcript (November 12, 2025)https://www.dwarkesh.com/p/satya-nadella-2}
Nov 25, 2025	NVIDIA	Memo to analysts, as reported by CNBC: customers depreciate GPUs over four to six years based on real-world longevity^{[18]CNBC, "Nvidia pushes back on charges that AI investment is a bubble," reporting an NVIDIA memo to analysts (November 25, 2025)https://www.cnbc.com/2025/11/25/nvidia-pushes-back-on-charges-that-ai-investment-is-a-bubble.html}

Burry argues from the product cycle: a new generation every one to two years should shorten the life of the last one. The defense argues from use: older GPUs keep running and keep earning.

Both are indirect evidence. Rental rates are a weak guide to resale value: in 2025 H100 rental indices fell while H100 resale prices rose.^{[1]American Compute, "GPU Residual Value: Underwriting a $3 Trillion Opportunity," Exhibits 7 and 15 (June 2026)https://www.amcompute.com/blog/gpu-depreciation-residual-value-report-2026} The direct test of a useful life is what the hardware sells for.

Book value vs resale bands

A six-year straight line tracks the moderate residual band. Five years tracks the conservative band in years two to four, then falls below it. Four years writes GPUs below what buyers pay.

The bands come from our 2026 residual value report and are measured as a percent of original price. The conservative band is the safe case; the moderate band is aggressive but defensible.^{[1]American Compute, "GPU Residual Value: Underwriting a $3 Trillion Opportunity," Exhibits 7 and 15 (June 2026)https://www.amcompute.com/blog/gpu-depreciation-residual-value-report-2026}

Book value under 4-, 5- and 6-year schedules vs resale bands, % of original price

Conservative bandModerate band4-year book5-year book6-year book

A GPU bought when its generation first shipped, valued at mid-year. Bands: American Compute residual value report, Exhibit 7 (June 2026). Book value: straight line to zero.

A six-year schedule lands in the moderate band in 12 of the 20 GPU-years below and never above it.

GPU	Year	Conservative	Moderate	4-yr book	5-yr book	6-yr book
H100	2026	27-39%	39-53%	8% Below	27% Conservative	39% Conservative
	2027	11-19%	19-42%	0% Below	7% Below	22% Moderate
	2028	5-7%	7-14%	0% Below	0% Below	5% Conservative
H200	2026	45-59%	59-74%	50% Conservative	60% Moderate	67% Moderate
	2027	34-46%	46-59%	25% Below	40% Conservative	50% Moderate
	2028	24-35%	35-51%	0% Below	20% Below	33% Conservative
B200	2026	59-67%	67-80%	67% Conservative	73% Moderate	78% Moderate
	2027	40-54%	54-68%	42% Conservative	53% Conservative	61% Moderate
	2028	30-42%	42-56%	17% Below	33% Conservative	45% Moderate
B300	2026	78-81%	81-89%	83% Moderate	87% Moderate	89% Moderate
	2027	52-64%	64-78%	58% Conservative	67% Moderate	72% Moderate
	2028	37-50%	50-64%	33% Below	47% Conservative	55% Moderate

2026-2028 shown; the chart runs to 2030. Book value for a GPU bought at first shipment (H100 late 2022, H200 mid 2024, B200 early 2025, B300 late 2025), at mid-year.

Take an H200 bought in mid 2024. In 2027 a six-year schedule carries it at 50% of cost, inside the moderate band of 46-59%. A four-year schedule carries it at 25%, below the conservative floor of 34%.

The oldest generations run the other way. A100s, close to six years past first shipment, still traded for thousands of dollars in August 2026, when every schedule above has them near zero.^{[19]American Compute, Rack Report, October 2026: benchmark asset values, data through August 2026https://www.amcompute.com/rack-report}

What it means for lenders

A lender cares about what the collateral sells for if the borrower defaults on a given date. The borrower's useful life is an accounting choice; the resale band is a market estimate.

Advance rates and amortization

A loan is covered when its balance sits at or under the conservative floor at each anniversary. The table runs a 36-month loan at 12%, closing in 2026, against the floor for each year. Green means covered.

Loan, % of cost	B300, year 1	Year 2	Year 3	H200, year 1	Year 2	Year 3
65% advance, fully amortizing	45.9% vs 52%	24.3% vs 37%	0% vs 28%	45.9% vs 34%	24.3% vs 24%	0% vs 7%
65% advance, 20% balloon	51.8% vs 52%	36.8% vs 37%	20% vs 28%	51.8% vs 34%	36.8% vs 24%	20% vs 7%
80% advance, fully amortizing	56.4% vs 52%	29.9% vs 37%	0% vs 28%	56.4% vs 34%	29.9% vs 24%	0% vs 7%
80% advance, 20% balloon	62.3% vs 52%	42.4% vs 37%	20% vs 28%	62.3% vs 34%	42.4% vs 24%	20% vs 7%

Balance after each anniversary vs the conservative floor for the calendar year (2027, 2028, 2029), both as a percent of original cost. Level monthly payments; the balloon is paid at maturity. Illustrative.

The same 65% advance is covered every year on a new B300 and uncovered for two years on a new H200. An H200 bought in 2026 is already about two years into its technology life, because the generation first shipped in 2024, and the resale market prices it from that date.

Balloons and residual risk

A 20% balloon at month 36 needs a 2029 resale value above 20% of cost. The conservative B300 floor that year is 28%; the H200 floor is 7%. A balloon on an older GPU is a residual bet.

Lessors carry this risk by design. A lessor that books the borrower's six-year book value as its residual is booking the moderate band. Residual value insurance is how a residual above the conservative band gets moved to an insurer.

References

Frequently Asked Questions

What is the useful life of a GPU for depreciation?

Six years at CoreWeave, Microsoft, Alphabet and Oracle; 5.5 years at Meta; five years at Nebius, IREN and, for a subset of servers, Amazon, per their SEC filings as of October 2026. Nebius extended from four to five years in January 2026, and Amazon shortened a subset from six to five in January 2025.

How does the useful life change earnings?

Straight-line depreciation on a $1 billion GPU fleet is $250 million a year over four years and $167 million over six, so the longer life adds about $83 million a year to pre-tax income. Microsoft said its move from four to six years added $3.7 billion to fiscal 2023 operating income.

What did Michael Burry say about GPU depreciation?

In November 2025 he argued that hyperscalers understate depreciation by stretching server useful lives while buying GPUs on a two- to three-year product cycle, and put the understatement at about $176 billion from 2026 to 2028. NVIDIA told analysts its customers depreciate GPUs over four to six years based on real-world longevity.

Do GPU resale prices support a six-year depreciation schedule?

Partly. Against American Compute's June 2026 residual bands, a six-year straight line on a GPU bought when its generation shipped sits in the moderate band in 12 of 20 GPU-years and never above it. Five years tracks the conservative band in years two to four, and four years writes GPUs below what buyers pay.

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Written by

Bernie Margulies, CEO

Bernie leads program business at American Compute. He maintains relationships with reinsurers and a range of capacity managers, and enjoys the nuances of designing unique coverages for specialty risk. He holds the Chartered Property Casualty Underwriter (CPCU) designation and is a candidate for the Associate in Captive Insurance (ACI). His background spans technology investment, insurtech leadership, and underwriting for emerging asset classes. Previously held senior roles at multi-billion dollar venture-backed insurance and technology companies.

AC Research

The AC Research team publishes analysis on GPU economics, AI infrastructure financing, and hardware depreciation. Our work is informed by direct experience underwriting GPU residual value insurance solutions.