The boom in artificial intelligence has more than offset these losses.
NVIDIA's annual 10-K report outlines the graphics and computing accelerator provider's cost structure, revealing the extent to which it has suffered from the consumer market's glut of PC components. Since compute accelerators remained in short supply throughout the past year, when discussing NVIDIA's surplus products, it makes sense to talk primarily about PC components, including gaming video cards of less-than-demand models.
Image Source: NVIDIA
As explained in the document, NVIDIA allocated $2.2 billion to pay for the supply of components for its needs and to write off surpluses both last year and in 2022. If the year before last it had to write off only $137 million due to surpluses, then last year, the amount increased to $540 million. Obviously, the demand for PC components fell more than the company expected when planning the purchase of components necessary for their production. As a result, this had a negative impact on the company's profit margin, reducing it by 2.7 percentage points in 2022 and by 7.5 percentage points in 2023. Fortunately, with a profit rate of around 73% at the end of last year, it’s hard to call such losses serious.