Meta's $210 Billion Tech Stack May Be Masking A Harsh Truth: Jim Chanos Says 12-Year Depreciation On 2-Year GPUs Overstates Profits

Benzinga
2025.07.31 07:25
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Prominent short seller Jim Chanos raised concerns that Meta Platforms Inc. may be overstating profits due to extended depreciation schedules on its AI infrastructure. Chanos noted that if the economic life of Meta's GPUs is only 2-3 years, profits could be significantly overstated. Despite these concerns, Meta reported strong Q2 2025 results with $47.52 billion in revenue and an 11.49% surge in share price. The depreciation debate is industry-wide, with potential impacts on operating income for Meta and Alphabet Inc.

Prominent short seller Jim Chanos raised concerns on Wednesday about Meta Platforms Inc. META potentially overstating profits through extended depreciation schedules on rapidly obsoleting artificial intelligence infrastructure.

Short Seller Questions Meta’s Accounting Methods

"If the true economic life on its GPUs is actually 2–3 years, most of its profits are materially overstated," Chanos wrote on X, noting that Meta's depreciable capital base stood at $210 billion as of June 30 with a reported useful life of 11 to 12 years.

Meta’s Massive AI Investment Scale

Meta reported strong second-quarter of 2025 results with $47.52 billion in revenue, beating analyst estimates of $44.58 billion. The company posted $7.14 earnings per share versus $5.79 expected.

However, capital expenditures reached $17.01 billion in the second quarter, with full-year guidance of $66-72 billion. CFO Susan Li indicated 2026 could see nearly $100 billion in capex as Meta accelerates AI infrastructure spending.

Industry-Wide Depreciation Concerns

The depreciation debate extends beyond Meta. Amazon.com Inc.‘s AMZN Amazon Web Services already reduced server equipment useful life, cutting operating income by approximately $700 million this year.

Barclays analyst Ross Sandler projects similar changes could reduce Meta’s operating income by $5 billion and Alphabet Inc.‘s GOOG GOOGL by $3.5 billion.

Financial Performance Amid Questions

Despite accounting concerns, Meta shares surged 11.49% in after-hours trading to $775.10 following earnings. The company maintains a 43% operating margin and generated $8.55 billion in free cash flow.

Goldman Sachs projects global data center demand will grow 50% by 2027, driven largely by AI workloads expected to account for 28% of usage.

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