Amazon plans $8 billion Nvidia GPU transfer to manage depreciation risks

Amazon is reportedly planning to transfer approximately $8 billion worth of Nvidia GPUs to a special purpose vehicle (SPV). This move aims to remove the assets from Amazon’s balance sheet while maintaining usage rights through contracts. By utilizing an SPV, Amazon can mitigate risks associated with asset depreciation and declining hardware value by transferring them to external investors, who may be offered up to 10% equity.

This strategy highlights the increasing financialization of AI computing power, where GPUs are treated as securitizable assets. Nvidia has also been involved in similar financing initiatives, collaborating with private equity firms like Blackstone, Apollo, and KKR to establish an asset-backed financing market for GPUs.

The shift comes amid a debate regarding the depreciation lifespan of AI hardware. While critics like Michael Burry argue that tech companies may be overestimating the useful life of chips—leading to systemic underestimation of costs—Nvidia maintains that its CUDA software platform ensures hardware remains functional across generations. Major clients such as Meta and Alphabet have reportedly extended their AI server depreciation periods from four to six years.

Despite these concerns, Morgan Stanley recently reiterated its top pick status for Nvidia, setting a price target of $300 and noting the company's diverse customer base beyond just hyperscale cloud providers.