Analysis into the large United States technology companies ahead of the reporting season has confirmed Nvidia is the leading firm with regard to profitability, but also that Alphabet (previously Google) and Microsoft could be catching up.
Exchange-traded fund manager Global X performed the assessment and used cash inflows per employee as its performance measure.
“Nvidia now generates over US$3 million in revenue per employee [as per Bloomberg data], far above Alphabet at around US$2 million and Tesla at about US$800,000. The gap speaks to the level of operating leverage each company is achieving as demand accelerates into AI (artificial intelligence), infrastructure and automation,” Global X senior investment strategist Billy Leung noted.
However, Leung pointed out these results may mean investment opportunities with Nvidia’s competitors are likely to arise in the immediate future.
“In our view, an opportunity may lie with Alphabet and Microsoft, where signs of improving profitability are emerging through platform scale, infrastructure reuse and efficiency in cloud and AI investments. We think it’s worth watching how these companies balance growth with cost controls, especially given recent commentary from AI-related companies on AI monetisation timing and infrastructure optimisation,” he said.
He was less optimistic about Tesla, acknowledging labour and capital requirements of car manufacturing are hindering the cash generated per employee.
“The launch of the Model YL, which is a longer, three-row variant aimed at the mid-size SUV market, signals an intention to move up the price curve, but it will still be volume driven. The robotaxi rollout in Austin shows a different approach, but near-term scale remains limited and unit economics are still unproven. Until software-led margin expansion becomes meaningful, Tesla’s efficiency metrics will remain tethered to physical output,” he explained.
The analysis also showed Nvidia leading its rivals in terms of profit margins, recording one of 55.9 per cent for the 2024 fiscal year. In comparison, Meta, Microsoft and Alphabet generated profit margins of 37.9 per cent, 36 per cent and 28.6 per cent respectively over the same period.
''