“How much is an old AI chip worth? The answer to that question has significant implications. Cloud-computing player CoreWeave recently suggested it could be a lot more than many people have been assuming.
The company recently signed a deal renting out Nvidia's A100 chips at "an attractive price" in a deal lasting into 2029, CoreWeave finance chief Nitin Agrawal said in a call with analysts last week. Those chips came out in 2020 and were produced for about three years. "Increasingly, we are seeing longer utilization at higher prices," he said, "offering the potential for significant further upside."
That could be a big deal because companies typically depreciate their chips over four to six years. That reduction in value has to run through their income statements, hitting profit. Yet the drag on the bottom line ceases after chips are fully depreciated. This means that selling access to old chips could come with high profit margins -- as long as the price companies can charge doesn't go down too much.
A nine-year-old chip still running and generating sales gives some credence to the idea that chips are viable assets to lend against. Banks and asset managers might be willing to extend credit to CoreWeave and other cloud-computing operations at cheaper interest rates, confident their chip collateral won't become worthless for a while.
Of course, there are counterpoints. The first is that many AI chips fail. Data on how frequently they fail is scarce, but a Meta Platforms report in 2024 on a 54-day training run for its Llama 3 model suggested the failure rate could be about 9% a year. Assuming that rate accelerates as time goes on, a nine-year-old AI computing cluster could easily be well below half its initial size because of failures.
The viability of an old chip is increasingly questionable as the rush to build out AI data centers runs into power constraints. Newer generations of Nvidia's chips are orders of magnitude more energy efficient than the A100. Companies may judge it more important to harvest more AI computational work from new chips than to boost profits by running old, less-efficient ones.
CoreWeave's statement about its A100s leaves an important question unanswered: What, exactly, is it able to charge? While Agrawal described the price as attractive, it is unclear what he meant by that. "Attractive" is in the eye of the beholder. And that, more than anything, will determine what value older chips retain.” [1]
1. New Jobs for Old AI Chips. Fitch, Asa. Wall Street Journal, Eastern edition; New York, N.Y.. 19 Aug 2026: B11.
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