Nvidia CEO Jensen Huang's pay slashed by $2.5 million after company misses sales targets

[pcnthuziast]

The corporate fever dream of profits exceeding 100% is well within reach for many huge corporations so long as consumers remain slaves to materialism.

 

[Xausejo]

Jensen is not the problem, it's company.. It's getting greedy pushing him to the limit..

 

[waclark]

Sure, though the follow-up question is how much profit does a GPU company need to make, per item, to cover the growth in investment needed to remain on top of the game? Let’s say there’s a net profit of $300 on a $800 4080 and Nvidia gets 75% of that profit. $7.3 billion was spent on R&D in FY2023 and $5.3 in FY22 so if that 4080 was the only product made, 8.9 million cards would need to be sold for the profit to cover that increase in R&D expenditure.

Of course, far more products are actually sold but global shipments of all dGPUs (including AMD and Intel) in the last quarter of FY2022 was estimated to be 13 million. If we assume that the average is somewhere like 80 million per annum, and Nvidia sold 85% of those, then it would suggest that there is scope for prices to be that low. However, the bulk of those shipments are for low-mid and mid-range cards, as well as laptops, so the profit margins will be lower.

I think your premise is only valid if there is a "net" profit of $300 on $800. That is a 37.5% net profit. A quick check of Nvidia net profits, a little over a year ago in July 2022, net profit was 9.79%, in October 2022, it was 11.47%, January of 2023 it jumped to 23.4%. That includes all of their product lines and I know their Enterprise products make a better profit than consumer GPUs. So I have to wonder what their real profit is on a GPU.

The best sales numbers I could find were Nov 2022, 160K total 40 series (4090/4080). But even if we triple that number it's far below the 8.9M cards needed to be sold, at the higher margin than they are currently making. Per Tom's Hardware, for all of 2022, Intel, Nvidia, and AMD sold 37.8M units, down from 50M units in 2021. Nvidia did 30M of that.

If you think about it, Let's say the 4080 cost $500 to build, you sell at $800 which is a 60% gross profit. Nvidia had a 43% CoGS for 2022 ($11.6B/$26.9B). And it's nearly tripled since 2020 from about $4B to just under $12B. Add 43% to the $500 and you're at $715, which leaves $85/profit or about 17%. I think to get to your profit of $300 the cost is going to have to be well below $500. It very well could be, though I would be surprised if it cost less than $500 to build.

 

[waclark]

The corporate fever dream of profits exceeding 100% is well within reach for many huge corporations so long as consumers remain slaves to materialism.

Have you checked Nvidia's profits recently. They are well short of 100%.