Tech companies at the forefront of the artificial intelligence revolution are facing a looming risk, which in turn could drag these stocks, according to an analyst.

Hidden But Not So Hidden Costs: As AI companies are striving to justify their massive investments in GPU chips, they could be stymied by depreciation, said Barclays analysts in a recent note, according to Business Insider.

Depreciation is a book entry into the statement that apportions the value of a fixed asset over time so that a company sets aside provisions for replacing that asset at the end of its shelf life. In the books, the purchase price is recorded not as an expense but as a capital expenditure that can show higher profits upfront.

Barclays analysts called depreciation to the massive AI chip investments a "not-so-hidden" cost of AI that only very few investors will factor into their valuation analysis.

Barclays tech strategist Ted Mortonson reportedly told Business Insider, "Because Nvidia has this very aggressive design cycle of roughly a year between major releases, all of those products have different skews and functionality and power profiles."

The strategist called this a headwind that can have a big impact on valuations and potentially send AI stocks lower over the next year. Wall Street analysts are grossly underestimating the depreciation costs over the next two years, he said.

To make his case, Mortonson noted that while Barclays estimates depreciation costs of $28 billion for Alphabet, Inc. (NASDAQ:GOOGL) (NASDAQ:GOOG) in 2026, the consensus is modeling 24% less. Barclays' estimate of depreciation for Meta Platforms, Inc. (NASDAQ:META) is $30.8 billion compared to the consensus of $21 billion.

Alphabet, Meta and Amazon, Inc. (NASDAQ:AMZN) shares are 5%-25% more expensive than the consensus models, given this mis-modeling, Barclays' Ross Sandler said, the report added.

Although valuations aren't stretched as they were during the bubble era such as the one seen in 2021, depreciation disconnects will likely be scrutinized given the ongoing debate where the big techs warrant multiple expansions, the report said.

Innovation Increases Risk? Extending the useful life of server assets from five years to six years or more could spread out the depreciation over a longer period of time, reducing its impact on earnings, the analysts said. But the rapid pace at which Nvidia is releasing new GPU chips could hamper this mitigative measure, they said.

Mortonson noted that the companies are spending over $200 billion and their capex was up over 50%. "We're so early in this, that combined with all the accounting, it all wraps up to return on invested capital, and I don't think you see a return on invested capital till sometime in 2025 or 2026," he said.

"I think the jury is still out. I think the accountants got to take a hold of it, and there's got to be much more transparency between extending the useful life of networking, storage, and servers versus GPUs. That's the bottom line," he added.