Amazon revises server lifespan amid AI shift, impacting 2025 earnings
The transition from CPUs to GPUs and accelerated AI-driven innovation shortens server depreciation cycles, signaling a broader industry shift
On February 7, 2025, Amazon (Ticker: AMZN) revised the useful life of certain servers and networking equipment from six to five years, effective January 1, 2025, which is expected to reduce 2025 operating income by $0.7 billion. Additionally, Amazon decided to retire some equipment early, leading to $920 million in accelerated depreciation in Q4 2024 and an anticipated $0.6 billion reduction in 2025 operating income.
From Amazon’s 10-K (emphasis added):
“We completed our most recent servers and networking equipment useful life study in Q4 2024, and are changing the useful lives of a subset of our servers and networking equipment, effective January 1, 2025, from six years to five years. For those assets included in “Property and equipment, net” as of December 31, 2024, whose useful life will change from six years to five years, we anticipate a decrease in 2…