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Don't think all Nvidians are now rich, says one engineer

Nvidia logo with a shadow of a person on a laptop in front of it
Some Nvidia employees are considered to be millionaires.SOPA Images
  • An Nvidia engineer spoke to BI about salaries at the chipmaker.

  • The West Coast-based worker has a $250,000 base and gets half that amount again in stock annually.

  • He said the reality was "not as rosy" as it seems, given high taxes and the cost of living.

An Nvidia engineer who makes $250,000 a year said the amount employees make at the chip giant was "not as rosy" as some might think.

He told Business Insider that while some Nvidians may be lucky enough to be millionaires, "a million doesn't go too far."

The software engineer didn't want to be identified as he's not authorized to speak to the media. BI has verified his employment and earnings.

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The West Coast-based engineer, who joined the company several years ago, gets nearly half of his base salary amount worth of restricted stock units (RSUs) a year.

"If you're looking from a far distance and you say Nvidians are millionaires, yes absolutely, but that million doesn't go too far," he said.

"But because the stock has gone sky-high, there's an expectation that everybody has made a lot of money," he said. "In reality, the RSUs you get is where the bulk of your exponential growth in wealth will be and not everybody will get a lot."

Even if some employees get a lot of RSUs given to them, he said that they might not all have held onto them.

"You will end up cashing your stocks to meet your annual obligations in terms of personal taxes, property taxes, and any other expenses you will have," he said.

Nvidia, which has about 26,000 employees, has greatly benefited from the generative AI boom as its GPUs are key components for applications like ChatGPT.

Its stock has soared in the past 12 months, making it the most valuable company after Microsoft and Apple. However, Nvidia shares fell 10% on Friday and are now almost $200 below their March peak, leaving the company worth $1.9 trillion.

Misconception

Nvidia engineers are called "individual contributors" (IC) and are ranked from tier 1 to tier 8.

The engineer BI spoke to is an IC level four.

He said that he's often asked in social settings how much he's making. However, the worker argues it's a misconception that all Nvidia staff are cash-rich, as much of their wealth is tied up in stock, with taxes also taking a big chunk out of their earnings.

"It would be incorrect to consider a job at Nvidia as a way to turn a quick million," he said.

His base salary places him in one of the second-highest federal income tax brackets, with a rate of 35%.

On top of that, he pays property taxes, Social Security, and Medicare levies.

'Life happens'

He argued that a million was "not a big number" in California, where Nvidia has four offices, as house prices and the cost of living are typically high.

He added that "life happens," meaning there are always unexpected bills or costs.

The biggest purchase he has made since cashing out some of his Nvidia stock was a $250,000 down payment on his three-bedroom house, which cost almost $1.4 million in 2018.

There's also a cap on how many stock units workers can get. Even the most exemplary employees are capped at receiving 50% of their base salary in stock a year.

That means that a Nvidia employee earning $1 million a year may not be considered rich in a place like San Francisco. According to the 2023 Charles Schwab Modern Wealth Survey, you need a net worth of $4.7 million to be "wealthy."

There's also big pay disparities between Nvidians in the US and other countries. A software engineer in India, who is an IC level 3, earns a base salary of about $19,000.

"I'm still happy with where I am and I'm glad I've made it, but it's not as rosy as it looks from the outside," the engineer said. "I'm really happy with the price Nvidia stock is trading at."

Nvidia Jensen Huang
Nvidia CEO Jensen Huang.I-HWA CHENG/AFP via Getty Images

The stock surge helped make CEO Jensen Huang one of the richest people in the world. He's in 21th spot on the Bloomberg Billionaires Index, worth about $67 billion.

Nvidia didn't respond to a request for comment from Business Insider.

Editor's note: This interview was carried out prior to Nvidia's share price falling on Friday.

Read the original article on Business Insider