Prominent short seller Jim Chanos raised concerns on Wednesday about Meta Platforms Inc. (NASDAQ: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 (NASDAQ: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 (NASDAQ:GOOG) (NASDAQ: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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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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