Core Viewpoint - Nvidia is at the forefront of the AI technology race, with its GPUs being essential for AI applications and data centers, but there is a significant debate regarding the depreciation of these AI chips and its implications for Nvidia's stock performance [4][13]. Company Overview - Nvidia is a leading technology firm specializing in graphics processing units (GPUs) and AI solutions, with a market capitalization of $4.49 trillion, making it the most valuable company globally [2]. Depreciation Debate - A debate has emerged regarding the depreciation schedules used by major tech companies for Nvidia's AI chips, with concerns that companies may be overstating earnings by assuming unrealistically long useful lives for these assets [3][5]. - Michael Burry argues that hyperscalers are underestimating depreciation costs, potentially inflating reported earnings by about $176 billion from 2026 to 2028 due to extended useful life assumptions [7]. Current Depreciation Practices - Hyperscalers are currently using depreciation schedules of approximately six years for GPUs, with companies like Meta Platforms and Alphabet adopting similar practices [8]. - Setting a depreciation schedule for AI GPUs is challenging due to their relative novelty, and if their actual useful life is shorter than assumed, it could lead to significant earnings impacts in the future [9]. Depreciation Methods - The accelerated depreciation method is suggested as more appropriate for AI GPUs, as it reflects the rapid obsolescence of technology, especially with Nvidia's annual product cycles [10]. - Data indicates that Nvidia's older GPUs, such as the A100, still retain economic value and can generate profit margins even after several years of use [11][12]. Implications for Nvidia Stock - The speed of AI chip depreciation is crucial for Nvidia's stock, as a shorter useful life could lead to impairment charges and reduced purchasing power for companies, directly affecting Nvidia's revenue [13][14]. - Analysts maintain a strong consensus rating for Nvidia, with a mean price target of $252.67, suggesting a potential upside of 43% from current levels [15].