NVIDIA INCLUDES STOCK COMPENSATION IN NON-GAAP METRICS, BREAKING WITH TECH INDUSTRY PRACTICE
Nvidia said it will begin including stock-based compensation in its non-GAAP financial measures starting in the first quarter of fiscal 2027, a departure from standard practice among technology companies that has long drawn criticism from investors including Warren Buffett.
CFO Colette Kress disclosed the change in commentary accompanying Nvidia's record fiscal 2026 results, which showed full-year revenues of $215.9 billion and fourth-quarter revenue of $68.1 billion. Kress characterized stock compensation as "a foundational component of our compensation program to attract and retain world-class talent."
The move addresses a longstanding critique that excluding stock-based compensation from adjusted earnings understates true employee costs and inflates profitability metrics that Wall Street uses to assess performance. Most technology companies have historically excluded the expense from non-GAAP figures, arguing that stock pay isn't cash outlay.
For Nvidia, the change carries minimal financial downside given its scale, while positioning the company as more transparent than competitors who continue the practice. Investors should watch whether other major tech firms follow suit or defend their current approach to non-GAAP reporting.
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