Server Depreciation Could Cut Big Tech Profits by $36B
Server depreciation assumptions are emerging as a key risk to Big Tech earnings amid the AI investment boom. Reuters Breakingviews estimates that if Amazon, Meta, Alphabet and Microsoft each shortened server useful-life estimates by one year, their combined 2027 net income could fall by about $36 billion. At current valuation multiples, the theoretical market-cap impact would approach $800 billion.
The companies use different schedules. Amazon shortened the useful life of certain servers and networking equipment from six years to five in 2025, adding an expected $1.4 billion to depreciation expense and cutting net income by $1 billion. Meta extended the estimated life of most such assets to 5.5 years, lowering projected 2025 depreciation by $2.92 billion and increasing net income by $2.59 billion, or $1 per share. Alphabet generally uses six years; Microsoft applies a two-to-six-year range depending on the asset.
The issue matters because faster AI hardware upgrades could make equipment obsolete sooner, while data-centre capital spending is running several times higher than depreciation. Changes in server depreciation schedules can materially affect reported earnings without changing cash flow immediately, making comparisons between tech companies harder and raising questions about future earnings quality.
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The story has no direct catalyst for cryptocurrency prices: it concerns accounting estimates at Amazon, Meta, Alphabet and Microsoft, rather than crypto regulation, token demand or blockchain activity. Its market effect is therefore likely to be indirect and limited. In the short term, traders may react to any related earnings guidance or a broader risk-off move in technology shares, which can spill over to Bitcoin and other digital assets through changing risk appetite and correlations. If investors become concerned that AI infrastructure spending is weighing on Big Tech earnings, that could modestly pressure crypto alongside other growth-sensitive assets; reassurance about cash flow and AI returns could have the opposite effect.
Over the longer term, any material repricing of major technology stocks could influence liquidity and sentiment across risk markets, but the article does not establish a specific crypto transmission mechanism or predict such a repricing. As in previous episodes when tech earnings or AI-capex forecasts drove shifts in Nasdaq sentiment, crypto reactions have generally depended on broader macro conditions, leverage, ETF flows and Bitcoin-specific demand. Traders should treat the depreciation debate as a watch item for tech-sector earnings and risk sentiment, not as a standalone bullish or bearish crypto signal.