The big complaint today is the high price of gaming graphics cards, especially those from NVIDIA. We have seen how year after year these have become more expensive, to a large extent, due to the adhesion of hardware for Ray Tracing and DLSS. Well, thanks to the financial report of NVIDIA we know that the benefit per graphics card is 57%.
We have to clarify that what is indicated is the gross benefits. This means that it is what you earn on average for each graphics card you sell, to put it simply. Then, you have to discount operating expenses such as payroll, loan amortization, current expenses such as electricity, water, internet and other similar ones.
Knowing how much these “current” costs are is quite complicated. More or less we can estimate that it represents between 20-25% 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 makes per graphics card
The data, without a doubt that interests us, is the gross profit per graphics cardwhich is the 56.9%. The less interesting the data that has dropped 8% compared to last year. It is not clear if it has to do with an increase in production and transport costs or, if it has been due to a downward adjustment of the margin.
Let’s extrapolate it to data. If a graphics card ‘x’ costs $1,000, NVIDIA nets $569. This means that the manufacture of the graphics card has cost 431 euros.
Keep in mind that this figure is if NVIDIA is the one who sells the graphics card, something that it does not usually do. We have intermediaries in the market, companies that sell us custom graphics cards. Some are ASUS, Gigabyte, EVGA, etc., who buy graphics cards from NVIDIA and customize them.
These intermediary companies, also called assemblers or partners, have to make money. Since they are large volume purchases, what NVIDIA usually does is reduce their unit profit margin. We don’t know how much, but we can assume that they will lower it to 40-45%, so that the assembler can earn money.
Here is the background of the issue. Where do you earn the most money? NVIDIA are not with the graphics cards gaming, it is with the professionals. Something that the financial report makes quite clear to us.
AI gains strength against gaming
We can see in the financial report how the sale of solutions for Data Center It is 15,000 million dollars. It supposes a increase of income from 41% YoY, which would be powered by artificial intelligence. As there are no intermediaries, being NVIDIA who manufactures and sells the product, the profit margin may be higher.
We have the other side of the coin and it is the gaming. The company reveals it has income 9.100 million dollars from the graphics card segment for gaming. It supposes a 27% revenue plungewhich would be largely driven by the high price of their new graphics.
These data would confirm that the company cannot release the RTX 40 Series because they are brutally expensive. But, although they are not able to sell them, the company refuses to lower the price of them. They continue to keep prices high as stock accumulates on the shelves and collects dust.
