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I have to wonder if Nvidia has reached a point where it hesitates to develop new products because it would hurt their margins. Sure they could probably release
by HDThoreaun 2y ago
I have to wonder if Nvidia has reached a point where it hesitates to develop new products because it would hurt their margins. Sure they could probably release a profitable networking product but if they did their net margins would decrease even as profit increased. This may actually hurt their market cap as investors absolutely love high margins.
- eru 2y agoThey can always release capital back to investors, and then those investors can put the money into different companies that eg produce networking equipment.
- thrw42A8N 2y agoWhy would they release money if they can invest it and return much more?
- eru 2y agoI was working under HDThoreaun's assumption that the margins would be lower. If they have other opportunities for investment with higher margins, they should seize those, of course. And perhaps even call up investors for more capital, if required.
- lovich 2y agoWhen the agents employed by investors would be harmed by releasing capital back, which is guaranteed since so many people’s compensation is in the form of stock and returning capital leads to decreasing stock value, why would those agents ever return the capital voluntarily?
- eru 2y agoHave you heard of stock buybacks?
- HDThoreaun 2y agoBuybacks increase stock price. Nvidia has a tiny dividend but most shareholder returns are in the form of buybacks.