CoreWeave says creaky Nvidia A100 chips may still mint money long after accountants have written them off.
According to The Wall Street Journal CoreWeave recently signed a deal renting Nvidia’s A100 chips at “an attractive price” into 2029. CoreWeave finance chief Nitin Agrawal told analysts the chips were still finding willing customers.
The A100 arrived in 2020 and was made for about three years. In AI years, that makes it less a pensioner and more something Silicon Valley usually sees it as landfill.
Agrawal said: “Increasingly, we are seeing longer utilisation at higher prices, offering the potential for significant further upside.”
Companies usually depreciate chips over four to six years. The declining value hits the income statement and drags on profit, which is less fun than pretending graphics chips are immortal treasure.
Once the chips are fully depreciated, that accounting pain stops. Selling access to older kit can then carry fat margins, provided the rental price does not collapse into comedy territory.
A nine-year-old chip still running and generating sales would also help the argument that AI chips are assets worth lending against. Banks and asset managers might extend cheaper credit to CoreWeave and other cloud operators if they believe the collateral will not turn into expensive scrap too quickly.
A 2024 Meta Platforms report on a 54-day training run for its Llama 3 model suggested a failure rate of around nine per cent a year. If that rate worsens with age, a nine-year-old AI cluster could be far less than half its starting size.
Power is another problem, because the AI data centre gold rush is already running into electricity limits. Newer Nvidia chips are vastly more energy efficient than the A100. If power becomes the bottleneck, ditching older chips could become obvious. Companies may prefer to squeeze more AI work from newer silicon rather than prop up margins with older, thirstier parts.
