By Adam Clark
Nvidia is planning to make the costs of stock-based compensation more transparent. It's a move that could put it in a better light against rivals Broadcom and Advanced Micro Devices.
Nvidia said alongside its earnings report last week that it would include stock-based compensation in its adjusted earnings for its current fiscal year. It also disclosed the amount that it would come to for its current quarter -- around $1.9 billion.
Giving workers shares as part of their compensation package is common practice in the technology sector. Nvidia's soaring share price has made many of its employees millionaires or even billionaires, at least on paper. However, the practice is also controversial among some investors, who claim that it acts as a hidden expense, inflating adjusted profits.
Nvidia's move could put pressure on its rivals to follow suit and benefit the company, according to Melius Research analyst Ben Reitzes. He notes that the hit to Nvidia's adjusted earnings per share from stock-based compensation would only be about 3%, versus more than 20% for Broadcom and AMD.
"As a result [of including stock-based compensation in adjusted earnings for each company] Nvidia's valuation on a price-to-earnings basis will look much more attractive on a relative basis," Reitzes wrote. "Also, if these peers need to rein in stock comp due to investor pressure, Nvidia would have an advantage in recruiting talent and completing acqui-hires [when a company is acquired for its employees] since the impact of these grants are so easily absorbed vs. peers."
Broadcom and AMD didn't immediately respond to requests for comment on Monday. Both companies already include stock-based compensation in their earnings as calculated under generally accepted accounting principles, or GAAP. Broadcom reported stock-based compensation expenses of $2.2 billion in its latest quarterly earnings and AMD reported $486 million.
Nvidia shares were up 2.8% at $182.11 in early trading. The stock was down 7.5% over the past five trading sessions through Friday's close, with the market underwhelmed by its earnings report and $30 billion investment in ChatGPT developer OpenAI, both announced in the past week.
If surging revenue isn't enough to revive the stock, new hardware might do the trick. Nvidia is planning to release a new AI processor specialized for inference -- the process of generating answers or results from AI models -- at its GTC developer conference this month, The Wall Street Journal reported, citing people familiar with the plans.
Inference currently accounts for between 20% and 40% of AI workloads and that will grow to 60%-80% over the next five years, according to analysts at Mizuho.
Nvidia will showcase an entire inference system containing a chip designed by start-up Groq and OpenAI has already agreed to become a major customer, according to the Journal. Nvidia agreed to pay $20 billion late last year to license key technologies from Groq and hire its top leadership. This would be the first sign of a return on that investment.
Nvidia didn't immediately respond to a request for comment early on Monday.
Write to Adam Clark at adam.clark@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
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March 02, 2026 14:00 ET (19:00 GMT)
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