Yes. Longer depreciation schedules can make reported profits look better by spreading the cost of servers and networking equipment over more years.
But the "GPU schedule" label is imprecise: major companies generally report those assets together, and the revised lives must still reflect expected useful life. Depreciation is the non-cash accounting expense that allocates an asset's cost over the years it is expected to be used. A longer estimate lowers annual depreciation expense, which raises reported operating profit and net income in the near term.
Table of Contents
- Why a longer life raises earnings
- The documented profit impact can be large
- Does this mean profits are misleading?
- Faster technology can push the other way
- What investors should check
Why a longer life raises earnings
A company that changes an asset's expected life from four years to six years records less depreciation each year, assuming the same purchase cost and residual value. The lower expense can lift earnings without increasing revenue or reducing cash spending.
The effect is an accounting timing change, not free new economic value. The company recognizes more expense in later years, unless it revises the estimate again or replaces the assets sooner. Alphabet provides a clear example. Its 2023 extension of server lives from four to six years, plus certain network equipment from five to six years, reduced depreciation by $3.9 billion and increased net income by $3.0 billion, according to Alphabet's FY 2023 Form 10-K.
The documented profit impact can be large
The earnings effect can materially change how investors read a quarter or year. Meta extended most server and network-asset lives to 5.5 years effective January 2025; according to Meta's FY 2025 Form 10-K, that reduced 2025 depreciation by $2.92 billion and increased reported net income by $2.59 billion, or $1.00 per diluted share. Oracle lengthened server and networking-equipment lives from five to six years in fiscal 2025.
The change reduced operating expenses by $733 million and increased net income by $573 million, or $0.20 per diluted share, according to Oracle's FY 2025 Form 10-K. Microsoft's earlier change shows the same mechanism. Beginning in fiscal 2023, its shift from four to six years for server and network equipment increased operating income by $3.7 billion and net income by $3.0 billion, or $0.40 per share.
Does this mean profits are misleading?
Not automatically. Useful life is an estimate, and companies may reasonably revise it when they expect equipment to remain productive longer than previously assumed. Still, investors should distinguish between stronger underlying operations and a lower accounting charge.
A company can report higher earnings because demand, pricing, or efficiency improved—or because depreciation fell. Those are different drivers, even when both appear in the same income statement. Meta says useful lives can differ from actual lives as business use and technology change. Its revised estimate applies prospectively to the remaining carrying amount, while assets that are not recoverable must be impaired, according to Meta's FY 2025 Form 10-K.
Faster technology can push the other way
Longer schedules are not the only defensible outcome for AI infrastructure. Rapid advances can shorten the period in which hardware remains economically useful. Amazon offers the important counterexample.
It shortened the lives of a subset of server and networking equipment from six to five years in 2025 because of faster AI and machine-learning technology development, increasing depreciation by $1.4 billion and reducing net income by $1.0 billion, primarily at AWS. That reversal is a useful warning for investors: a longer depreciation life is a judgment about expected use, not a permanent profit lever. The central question is whether the company's hardware can still generate attractive returns for the additional year or years assumed.
What investors should check
When a company highlights AI-driven earnings growth, separate the operating story from the accounting estimate. Cash spending remains especially important. Meta recorded $69.69 billion of 2025 property-and-equipment purchases while reporting $43.59 billion of free cash flow, so its depreciation benefit did not remove the funding demands of infrastructure investment.
- Read the accounting-policy note for the old and new useful lives.
- Find the stated effect on depreciation, operating income, net income, and earnings per share.
- Compare the earnings benefit with capital expenditures and free cash flow.
- Watch for later impairments, accelerated retirements, or shortened useful lives.