Getty Images; Alyssa Powell/BICompanies are facing rising depreciation costs from their massive chip investments, Barclays says.Barclays warns these costs will significantly impact earnings estimates for top tech firms.Depreciation costs could lead to AI stock price declines and valuation scrutiny, according to Baird's Ted Mortonson.Companies getting a boost from the booming AI trade are in a race against the clock to prove that their massive investments in GPU chips are paying off, but there's a little-talked-about issue that will make that endeavor even harder.Depreciation related to massive AI chip investments is the "not-so-hidden" cost of AI that few investors are factoring into their valuation analysis of these companies, analysts at Barclays said in a recent note.Depreciation is an accounting method that allows companies to spread out the cost of a capital investment over its useful lifetime.
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mfox@businessinsider.com (Matthew Fox), Business Insider
Sun, 08/11/2024 - 5:16am
Topics: barclays we images baird's ted ai gpu amazon ross sandler because nvidia meta amzn barclays sandler cfos business ai ted mortonson gpu alphabet meta platforms nvidia morton insider wall street meta gpus hidden risk lurking depreciation costs chips tech capital big estimates life billion massive expense return years cost investments consensus valuation mega-cap cycle extending accounting record spending assets hit higher added earnings lead valuations company method lifetime dollars billions mega light immediately impact leading spread chip servers
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