> Compute is also a rapidly depreciating asset.

That's the default assumption but in the new GPU+Memory constrained age isn't true.

Time on 4 year old H100 servers costs more now than when they were new (!!)

it’s more like if you were to value Hertz as if they were a self-driving car company, only to find they’re a car rental company

Car rentals are a great comparison, but not for the reason you think. Cars depreciate value similarly to GPUs. The depriciation lifecycle timeframe is actually similar between hyperscaler GPUs and mainstream corporate car rental companies ike Hertz. They sell their cars after 2-3 years or 20-40k miles. There is a huge market for used cars. Hertz runs their used car sales out of their rental retail offices and a lot of overhead is shared. So take the difference in cost to buy new in bulk from the manufacturer from the retail sales price for a 2-3 year old car. As long as Hertz can make more money renting it out in that time, that's revenue positive.

Same with GPUs. There is also a huge market for used GPUs from 1-2 generations ago. The A100 is a six year old chip at this point and is still running strong, especially for inference. Like cars, chips can be refurbished and repaired. A hyperscaler or even mid level player here isn't going to hold onto chips for their entire usable lifespan.

It is depreciating, but demand has been very high.

There's a reason old 3090's went from $600 in 2022 o to over $1K in 2026.

> if there are no customers they’re not costing you more money, unlike your computer which you are using for training

So are you using the computers or not? I'd argue that if you're using them for training, then it's not wasted capacity. And if you're not using them, then you can turn them off, so you're not sucking up energy.

Compute is also a rapidly depreciating asset.

I don’t know but this dude at my son’s school has a 32GB RTX 5090 and it’s worth more than what he paid for; and he did the same trick with the RTX 4090 before that.

Until shortages are the rule, these assets are appreciating

"depreciating" is not being used in the right sense.

There is depreciation, which is taking the purchase price and dividing it across N number of years (typically 5). That's the D in EBITDA and is mostly used as a profitability calculation.

The depreciation of a GPU also gets mucked up in the current GPU financed market as well. DDTL loans. The people running the GPUs often don't even own the GPU, they lease it, so there is nothing for them to depreciate (D).

The analogy that a GPU is like a used car makes zero sense. There is no oil or tires to change on a GPU. They don't wear out in the same way that a rental car would. They are housed in climate controlled locations with clean power. They just don't fail the way that is portrayed in the press.

Useful life of a GPU is based on profitability. When does opex cost more than profitability?

Some companies, like mine, also have support contracts. Anything goes wrong with the GPU (or any part of the system), Dell comes and fixes it at no extra charge. We just migrate customers and workloads to hot spares while the parts are replaced.

As for compute going down in value... the 122TB of enterprise nvme and 2GB of ram in each server that I bought 2 years ago is now worth vastly more than I paid for it. I'm also renting my GPUs out for more money now due to supply being so tight and demand being so high.

Compute is about to come an appreciating asset in the near-term, and it some ways it already is.

The frontier labs are shifting from pricing grounded in the price of compute, to pricing grounded in the intelligence provided, or more specifically the economic value of that intelligence downstream.

The margins on that allow them to pay a hefty premium on compute and still come out ahead.

As they buy more compute at high prices, they're also pricing out competition from cheaper models. It's already become materially more difficult to get compute to run open weight models at competitive prices as a result of frontier labs in the last year.

no need for a car analogy.

the comment you replied to is word-by-word what people hyping canadian telecoms were saying before the dotcom crash!