Market Capitalization: $3.49 Trillion
Shares Outstanding: 24.49 Billion
Sector: Technology
Industry: Semiconductors
Analysis as of: December 8, 2024

1.  Company Overview

NVIDIA Corporation (NASDAQ: NVDA) is a leading technology company specializing in graphics processing units (GPUs), data center solutions, and artificial intelligence (AI) computing platforms. Founded in 1993 and headquartered in Santa Clara, California, NVIDIA’s products are at the core of diverse applications, ranging from gaming, professional visualization, and AI training and inference, to accelerated computing in data centers.

Key Product Segments:

• Gaming GPUs: High-performance graphics cards for PCs and gaming consoles.
• Data Center Solutions: GPUs, networking, and software platforms for cloud, AI, and high-performance computing workloads.
• Professional Visualization: Workstation solutions for designers, engineers, and creatives.
• Automotive & Edge AI: AI-driven solutions for autonomous vehicles, robotics, and edge computing applications.

Revenue Mix:
NVIDIA’s revenue has historically been driven by gaming, but the company’s data center and AI segments have experienced explosive growth, now representing a substantial share of total sales.

Distribution Channels:
Direct sales to original equipment manufacturers (OEMs), system integrators, online and brick-and-mortar retailers, and cloud service providers.

2.  Financial Performance

a. Revenue and Growth

• TTM Revenue (as of Oct 27, 2024): $113.27 Billion
• YoY Revenue Growth (TTM): +152.44%

Revenue Trend (Millions USD):

Fiscal Year End      Revenue  YoY Growth

Jan 26, 2020   10,918    -6.81%

Jan 31, 2021   16,675    +52.73%

Jan 30, 2022   26,914    +61.40%

Jan 29, 2023   26,974    +0.22%

Jan 28, 2024   60,922    +125.85%

TTM 2024      113,269   +152.44%

Analysis:

• NVIDIA’s recent revenue surge is extraordinary, fueled by booming demand for AI-capable GPUs and data center solutions.
• This growth far outpaces historical performance, reflecting the global AI adoption trend and NVIDIA’s market leadership in accelerated computing hardware.

b. Profitability

• Net Income (TTM): $63.07 Billion
• EPS (TTM): $2.53
• Profit Margin: 55.69%
• ROE: 127.21%
• ROA: 59.13%

Analysis:

• Exceptional profitability metrics highlight NVIDIA’s success in commanding premium pricing and efficient cost structure.
• High returns on equity and assets underscore effective capital deployment and operational excellence.

c. Margins

• Gross Margin (TTM): 75.86%
• Operating Margin (TTM): 62.71%
• EBITDA Margin (TTM): 64.22%

Analysis:

• Margins are remarkably high, reflecting dominant market position, proprietary technology, and pricing power.
• The surge in data center and AI-related revenues has enhanced margin profiles as these segments typically yield higher margins than traditional consumer-oriented products.

d. Cash Flow

• Operating Cash Flow (TTM): $58.96 Billion
• CapEx (TTM): – $2.41 Billion
• Free Cash Flow (TTM): $56.55 Billion
• Free Cash Flow Margin: 49.92%
• FCF Per Share: ~$2.31

Analysis:

• Exceptional free cash flow generation positions NVIDIA to invest heavily in R&D, expand production capabilities, and pursue strategic acquisitions.
• Ample cash flow supports increasing returns to shareholders through buybacks and potentially higher dividends over time.

3.  Balance Sheet

• Total Assets: $96.01 Billion
• Total Liabilities: $30.11 Billion
• Shareholders’ Equity: $65.90 Billion
• Total Debt: $10.23 Billion
• Cash & Equivalents: $38.49 Billion
• Net Cash Position: $28.26 Billion
• Net Cash Per Share: $1.15
• Debt/Equity Ratio: 0.16
• Current Ratio: 4.10
• Working Capital: $51.16 Billion

Analysis:

• Extremely strong liquidity with a current ratio of 4.10 and substantial net cash balance.
• Low leverage (Debt/Equity = 0.16) provides financial flexibility and reduces risk.
• Robust balance sheet supports aggressive investment in AI research, product development, and market expansion.

4.  Valuation

• Current Stock Price (as of December 8, 2024): $142.44
• PE Ratio (TTM): 56.25
• Forward PE Ratio: 36.12
• PB Ratio: 52.97
• PS Ratio: 30.93
• P/FCF Ratio: 61.69
• PEG Ratio: 0.95
• EV/EBITDA Ratio: 47.57
• EV/FCF Ratio: 61.19

Analysis:

• The valuation multiples are extremely high, reflecting NVIDIA’s growth potential and dominance in the AI hardware domain.
• A PEG ratio below 1 (0.95) suggests that relative to its growth rate, the stock may not be as overpriced as raw multiples suggest.
• Investors appear to be pricing in sustained high growth in AI, data centers, and accelerated computing segments.

5.  Market Performance

• 52-Week Range: $45.83 – $152.89
• 52-Week Price Change: +205.89%
• Beta: 1.63

Analysis:

• The stock’s meteoric rise (~205.89% over the last year) outperforms most peers and market indexes.
• A beta of 1.63 indicates higher volatility, which can result in more pronounced price swings in response to market sentiments and economic cycles.

6.  Financial Health and Risks

a. Liquidity & Leverage

• Strong liquidity (Current Ratio >4) provides a buffer against market downturns or supply chain disruptions.
• Light debt load reduces financial risk, giving NVIDIA flexibility in capital allocation.

b. Profitability & Cash Flow

• Extraordinary margins and cash flows underline sustainable competitive advantages.
• Ability to reinvest free cash flow into R&D ensures continued product leadership.

c. Operational Risks

• High exposure to AI and data center markets, which are rapidly evolving and subject to cyclical investment patterns.
• Competitive pressure from other semiconductor and AI hardware companies.
• Supply constraints and geopolitical tensions could affect semiconductor supply chains and production costs.

d. Market & Regulatory Risks

• Regulatory scrutiny of technology giants and potential export controls on advanced chips could limit certain growth avenues.
• Rapid technological shifts demand continuous innovation to maintain market share.

7.  Conclusion

Pros:

• Dominant player in AI acceleration and GPUs, positioning NVIDIA at the forefront of the AI revolution.
• Exceptional growth rates and profitability metrics.
• Strong balance sheet and cash flow support continuous innovation, M&A activities, and shareholder returns.

Cons:

• Valuations are extremely high, raising the risk of a substantial correction if growth expectations moderate.
• Increasing competition in AI and data center segments may pressure margins long-term.
• Market volatility and geopolitical constraints could introduce supply chain and regulatory uncertainties.

Disclaimer:
This analysis is for informational purposes only and does not constitute investment advice. Investing involves risks, including possible loss of principal. Past performance is not indicative of future results. Investors should conduct their own research or consult a qualified financial advisor before making any investment decisions.