NVIDIA's FY2026 stock-based compensation totaled $6.4B (3.0% of revenue), exceptionally low for a tech company of its scale. Beginning Q1 FY2027, NVIDIA will include SBC in non-GAAP financial measures for the first time, aligning with Magnificent Seven peers (Alphabet, Apple, Microsoft, Meta) who already include SBC in their primary reporting. The ~3% EPS impact is minimal compared to semiconductor peers: AMD (5.5-10.6% of revenue), Broadcom (~21% of revenue), and Marvell (14-20% EPS impact from SBC).
CEO Jensen Huang holds ~3.5% of shares (~860M shares, worth ~$150-170B) and has sold ~$1.6B through 10b5-1 plans over 2024-2025, representing <1% of his stake. NVIDIA's $40.4B in FY2026 buybacks (per audited 10-K) more than offset SBC dilution, reducing shares outstanding by 1.17% YoY to 24.5B diluted. The SBC policy change is a transparency positive that makes NVIDIA's already-dominant profitability more credible on an apples-to-apples basis.
Financial profile is exceptional by any measure
NVIDIA's fabless model generates extraordinary free cash flow with minimal reinvestment requirements. The capital-light structure amplifies returns far beyond typical semiconductor companies.
Will the SBC policy change prompt AMD, Broadcom, and Marvell to follow suit, and if so, how will the 14-20% EPS hit affect their relative valuations?