Nvidia's data center chips generated a combined $309 billion in revenue across fiscal 2025 and fiscal 2026, and most of that hardware is not scheduled to retire until 2029 or later. That timeline means Nvidia's expected 2028 growth depends almost entirely on new capacity rather than replacement demand, based on the depreciation schedules its largest customers disclose in their filings.
Nvidia's data center revenue climbed from $47.5 billion in fiscal 2024 to $115.2 billion in fiscal 2025, a 142% jump. It rose another 68% to $193.7 billion in fiscal 2026. Combined, that is about $309 billion of hardware shipped in two years, and nearly all of it is likely still installed and running.
Cloud providers plan for chips to last five to six years
According to its latest annual filing, Microsoft depreciates servers and network equipment over two to six years, while Alphabet generally uses six years for the same categories. Meta Platforms raised its estimate to 5.5 years in 2025, a change that cut its depreciation expense by about $2.9 billion and added $1.00 to earnings per share for the year.
Amazon moved the opposite direction. It raised its server estimate from five years to six at the start of 2024, then reversed course a year later, cutting a subset of servers and networking equipment back to five years. Amazon said the shorter lives reflect the increased pace of technology development in artificial intelligence and machine learning, a change that added $1.4 billion to its 2025 depreciation and amortization expense.
Little of the 2024-2025 hardware wave retires by 2028
A machine bought in 2024 on a five-year schedule retires in 2029 at the earliest; on a six-year schedule, not until 2030. That means nearly everything purchased during the 2024 and 2025 spending waves should still be in service in 2028, so growth that year depends largely on new capacity rather than replacements.
Nvidia's chief financial officer Colette Kress said on the company's late-August earnings call that Nvidia expects revenue to grow about 70% in fiscal 2028, which runs through late January 2028, and called that outlook supply constrained. On an earnings call last November, Kress said the A100 chips Nvidia shipped six years earlier were "still running at full utilization today," crediting the company's CUDA software.
A paid-off chip becomes cheap competition
Once a server's depreciation schedule ends, its owner can rent it out at any price that covers electricity and space, making older chips cheap competition for inference work that arguably doesn't require the newest hardware. A marketplace for used Nvidia chips opened this summer, though Kress said in August that Nvidia's computing capacity remains fully utilized across every cloud it serves, with supply expected to stay a bottleneck at least through the end of fiscal 2028.
Nvidia shares traded around $230, about 29 times earnings, as of the article's writing.
Source: The Motley Fool
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