Depreciation Subtleties: S&P Earnings Are Vastly Overstated

Impact · against what's priced in

The article identifies a systemic overstatement of S&P 500 earnings due to deferred AI capex depreciation, which creates a valuation cliff for hyperscalers in 2028. While the market is already skeptical of immediate AI monetization, this introduces a new structural risk to long-term earnings quality that could undermine current margins.

AMZN−0.40

Challenges what's priced in

The price assumes

Free cash flow margin expansion from 1.1% toward the mid-teens as capital expenditure stabilizes