Tech giants are investing hundreds of billions in AI infrastructure, but the lack of financial transparency in disclosures is becoming a new challenge for investors. Companies often combine data center construction costs with chip expenditures in their reports, despite significant differences in depreciation cycles, making it difficult for investors to accurately assess AI investment risks.

On Thursday, reports indicated that tech firms typically provide total costs for AI data centers and chips related to long-term projects but rarely break down individual expenses. The depreciation timelines for facilities and chips vary drastically—chips may need replacement in a few years or less, while buildings can last decades, yet these costs are lumped together.

This reporting method has raised concerns from Gaurav Kumar, an accounting professor at the University of Arkansas at Little Rock, who stated, "Construction-in-progress accounts are a big hole where hyperscale operators can bury substantial costs."

Data from investment research firm Hudson Labs shows that publicly traded companies with market caps of at least $20 billion mentioning AI infrastructure in financial filings reported a total of approximately $214.5 billion in construction-in-progress this year.

**Chips vs. Buildings: Depreciation Disparities** Data center buildings may depreciate over 20–40 years, while AI chips could become obsolete in under three years. Accounting advisor Olga Usvyatsky noted that disclosure practices haven’t kept pace with the real-world demand for AI investment clarity.

Tech companies have increasingly claimed longer lifespans for servers and network equipment, reducing replacement frequency. This strategy helps preserve cash flow, cuts depreciation expenses, and boosts reported profits—sometimes by hundreds of millions.

Ideagen research reveals 74 adjustments to asset lifespan estimates by public companies in 2024, many extending server and network equipment usability—the highest level since 2020.

**Divergent Disclosures Among Tech Giants** Major tech firms show stark differences in construction-in-progress reporting. Alphabet recorded $50.6 billion in unutilized assets for 2024, up 44% YoY. Amazon reported $46.4 billion (up 62%), while Meta Platforms totaled $26.8 billion (up 10%).

In contrast, Microsoft didn’t specify figures, disclosing only $32.1 billion in commitments for data center projects in its latest annual report.

These accounts represent 30%, 18%, and 22% of each company’s net fixed assets, respectively. Since firms often purchase GPUs during construction, AI chip costs are frequently included in these totals.

**Investors Demand Granular Details** Jack Ciesielski of R.G. Associates emphasized investors’ need for project- and component-level breakdowns to assess obsolescence risks, noting frustrations stem from conflating hardware like electronics with buildings.

Ravi Gomatam of Zion Research Group added that shareholders struggle to evaluate AI risks partly due to sparse chip utilization disclosures.

FASB Chair Rich Jones stated that while granular construction-in-progress reporting isn’t currently mandated, the board will explore broader disclosure improvements. USC accounting professor Bobby Carnes summarized: "At inception, construction-in-progress is a black box—and it remains one even after completion."