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The growth is one thing, but maintaining gross margins of 76% in big tech is quite challenging. Ignoring AI bubble risk, in the near term, their main risk is ma
by acchow 2y ago
The growth is one thing, but maintaining gross margins of 76% in big tech is quite challenging. Ignoring AI bubble risk, in the near term, their main risk is margin compression
- tonyedgecombe 2y agoYes, the big difference between them and Apple is Nvidia’s customers would jump in a flash if one of their competitors offered a better price performance ratio. Judging by the history of this industry that seems inevitable.
- pjmlp 2y agoApple had similar problem in the last century. They have a nice money cushion nowadays, but mankind isn't going to keep rebuying iPhone and iPads forever.
- ivewonyoung 2y agoCUDA has been a decent moat.
- wruza 2y agoSeems evitable to me, given how poor software-wise are competitors and how hard it is to make software quickly. Afaiu, Nvidia is a software company. It chose a headstart of a decade. GPUs are just a platform for running it, in a sense. It’s Nvidia who could run on a competitors GPUs if it wanted, but not vice versa. With own GPUs it has a full lock-in mechanism. Judging by the history of this industry that seems inevitable. You mean games?
- Bombthecat 2y agoBut developers won't, they will stick to cuda
- Prbeek 2y agoThose margins also attract othertech firms to get into the industry either to compete with you or to cut costs because you are overcharging them.
- acchow 2y agoYes, competition is what causes the margin compression.
- Jlagreen 2y agoNvidia's gross margins have been 50% with gaming cards only a decade ago. They have been above Apple's since back then. And Nvidia had grown them to 65% even before the AI craze. They main reason why it becomes so crazy is that demand exploded and with it unit shipments which have grown gross margins and net profit insanely. Nvidia's management has the best track record in the industry concerning margins. Jensen himself said that he says no to business opportunities if he thinks the margin there is too low. That's why Nvidia has left consoles and left it to AMD almost entirely. Nintendo Switch is an exception because Nvidia could there simply deliver a developed shelf product and skipped the huge effort of developing a console specific chip.