The big complaint today is the high price of gaming graphics cards, especially those from NVIDIA. We’ve seen how, year after year, these have become more expensive, in large measure due to the hardware’s adherence to Ray Tracing and DLSS. Well, thanks to the financial report of Nvidia we know that the the profit per graphics card is 57%.
It should be noted that what is indicated are the gross profits. That means that’s what you earn on average for every graphics card you sell, to put it simply. Next, you need to discount operating expenses such as payroll, loan amortization, current expenses such as electricity, water, internet, and the like.
Knowing how much these “current” costs are is quite complicated. More or less, we can estimate that it represents between 20 and 25% of the gross profit margin. But hey, what matters to us are some of the interesting facts from the financial report.
NVIDIA tells us how much it earns per graphics card
The data, undoubtedly of interest to us, are the gross profit per graphics cardWhat is the 56.9%. The less interesting the data down 8% from last year. It is unclear whether this is an increase in production and transportation costs or a downward margin adjustment.
Let’s extrapolate it to the data. If an “x” graphics card costs $1,000, NVIDIA earns $569. This means that the manufacture of the graphics card cost 431 dollars.
Keep in mind that this figure is if NVIDIA is the one selling the graphics card, which it usually doesn’t. We have intermediaries in the market, companies that sell custom graphics cards to us. Some are ASUS, Gigabyte, EVGA, etc., who buy graphics cards from NVIDIA and customize them.
These intermediary companies, also called assemblers or partners, must earn money. Since these are high-volume purchases, NVIDIA generally reduces its profit margin per unit. We don’t know how much, but we can assume they will lower it to 40-45%, so the assembler can make some money.
Here is the context of the problem. Where do you make the most money? NVIDIA is not with the graphics cards game is with the professionals. Something that the financial report shows us quite clearly.
AI is gaining strength against games
We can see in the financial report how the sale of solutions for Data center It is $15 billion. This supposes a increase income from 41% interannual, which would be powered by artificial intelligence. Since there are no intermediaries, being NVIDIA who manufactures and sells the product, the profit margin can be higher.
We have the other side of the coin and that is the video game. The company reveals that it has revenue $9.100 million of the gaming graphics card segment. This supposes a 27% drop in revenuewhich is said to be largely driven by the high price of their new graphics.
This data would confirm that the company cannot release the RTX 40 series as they are brutally expensive. But, although they are unable to sell them, the company refuses to lower the price. They continue to keep prices high as inventory piles up on the shelves and gathers dust.
