By Indwallet.com 
Nvidia is in the LimeLight as the stock has dropped down by approximately 2% against the market expectations. Despite Nvidia smashing expectations and doubling its sales, its shares have taken a dip. The AI chip powerhouse reported a record-breaking $30 billion in revenue over the past three months.
Nvidia has been riding high on the AI wave, with its market value skyrocketing past $3 trillion. But even though analysts have come to expect jaw-dropping growth from Nvidia, this latest report hints that the rapid growth might be starting to level off, according to Simon French, head of research at Panmure Liberum.
Nevertheless, NVIDIA Corporation (NASDAQ: NVDA) has solidified its position as a market leader in the semiconductor industry, particularly in the fields of AI, gaming, and data centers. As a company renowned for its cutting-edge GPU technology, NVIDIA’s financial performance over recent years has been nothing short of extraordinary. This article delves into NVIDIA’s financial statements, key statistics, and earnings reports to provide a comprehensive analysis of the company’s stock performance over the past years, current trends, and future outlook.
Contents
NVIDIA’s earnings per share (EPS) and revenue growth are crucial indicators of its financial health and market position. Over the past several quarters, NVIDIA has consistently outperformed market expectations, demonstrating strong revenue growth and profitability.
Quarterly EPS and Revenue Analysis
- Q4 ’22 to Q2 ’24:
- In Q4 ’22, NVIDIA reported an EPS of $0.09, which exceeded the estimated $0.08 by 8.53%. This marked the beginning of a strong upward trend.
- By Q2 ’24, the EPS had surged to $0.68, surpassing the estimated $0.65, reflecting a 5.36% surprise. This consistent outperformance highlights NVIDIA’s robust financial management and its ability to capitalize on market opportunities.
- Revenue followed a similar trajectory, growing from $6.05B in Q4 ’22 to $30.04B in Q2 ’24, significantly beating estimates in every quarter.
Table 1: Quarterly EPS and Revenue Performance (Q4 ’22 to Q2 ’24)
| Quarter | Reported EPS (USD) | Estimated EPS (USD) | Surprise (%) | Reported Revenue (USD) | Estimated Revenue (USD) | Surprise (%) |
|---|---|---|---|---|---|---|
| Q4 ’22 | 0.09 | 0.08 | +8.53 | 6.05B | 6.02B | +0.60 |
| Q1 ’23 | 0.11 | 0.09 | +18.02 | 7.19B | 6.53B | +10.10 |
| Q2 ’23 | 0.27 | 0.21 | +29.69 | 13.51B | 11.19B | +20.70 |
| Q3 ’23 | 0.40 | 0.34 | +19.40 | 18.12B | 16.19B | +11.94 |
| Q4 ’23 | 0.52 | 0.46 | +12.34 | 22.10B | 20.40B | +8.37 |
| Q1 ’24 | 0.61 | 0.56 | +9.30 | 26.04B | 24.59B | +5.90 |
| Q2 ’24 | 0.68 | 0.65 | +5.36 | 30.04B | 28.74B | +4.53 |
The above table showcases NVIDIA’s consistent ability to beat earnings and revenue estimates, which is a strong indicator of the company’s operational efficiency and market demand for its products.
Annual EPS and Revenue Growth
On an annual basis, NVIDIA’s EPS and revenue have also seen significant growth:
- 2017 to 2023:
- Revenue grew from $6.91B in 2017 to $60.92B in 2023, driven largely by the company’s leadership in AI, gaming, and data center markets.
- The EPS saw a corresponding rise, reflecting the company’s improved profitability and effective cost management.
Table 2: Annual Revenue and EPS Growth (2017 to 2023)
| Year | Revenue (USD) | EPS (USD) |
|---|---|---|
| 2017 | 6.91B | 1.32 |
| 2018 | 9.71B | 2.57 |
| 2019 | 11.72B | 3.13 |
| 2020 | 15.79B | 4.52 |
| 2021 | 20.40B | 5.75 |
| 2022 | 24.59B | 6.98 |
| 2023 | 60.92B | 12.12 |
This table demonstrates the explosive growth in both revenue and EPS, underscoring NVIDIA’s successful strategy and market expansion.
Graph 1: NVIDIA Annual Revenue and EPS Growth (2017-2023)
(Note: The graph should depict a steep upward trajectory, reflecting NVIDIA’s impressive growth over the years.)
2. Valuation and Profitability Analysis
NVIDIA’s financial metrics indicate that the stock is currently trading at a premium, reflecting high investor confidence and strong market positioning.
Valuation Ratios:
- Price-to-Earnings (P/E) Ratio:
- As of Q2 ’24, NVIDIA’s P/E ratio stood at 75.05, indicating that investors are willing to pay a premium for the company’s earnings, likely due to anticipated future growth in AI and data centers.
- Price-to-Sales (P/S) Ratio:
- The current P/S ratio of 40.03 highlights the high valuation relative to sales, reflecting strong market demand and optimism about NVIDIA’s future revenue streams.
Table 3: Valuation Ratios (Q4 ’22 to Q2 ’24)
| Quarter | P/E Ratio | P/S Ratio | P/B Ratio | Enterprise Value (USD) | Enterprise Value to EBITDA |
|---|---|---|---|---|---|
| Q4 ’22 | 116.91 | 18.70 | 22.72 | 503.18B | 70.50 |
| Q1 ’23 | 144.23 | 26.70 | 27.99 | 687.71B | 112.72 |
| Q2 ’23 | 112.92 | 35.75 | 41.97 | 1.16T | 93.87 |
| Q3 ’23 | 53.47 | 22.51 | 30.02 | 1.00T | 45.19 |
| Q4 ’23 | 51.13 | 24.94 | 34.99 | 1.50T | 43.60 |
| Q1 ’24 | 51.32 | 27.37 | 43.90 | 2.16T | 43.88 |
| Q2 ’24 | 75.05 | 40.03 | 64.20 | 3.07T | 62.30 |
The high valuation ratios suggest that NVIDIA is priced for significant growth, and investors are betting on the company’s continued dominance in key markets.
Profitability Ratios:
NVIDIA’s profitability ratios further highlight its financial strength and operational efficiency:
- Return on Equity (ROE):
- NVIDIA’s ROE has risen dramatically to 115.66% as of Q2 ’24, reflecting the company’s ability to generate significant profits from shareholders’ equity.
- Gross Margin:
- The gross margin has increased to 78.35%, indicating that NVIDIA is effectively managing its production costs while maintaining strong pricing power.
Table 4: Profitability Ratios (Q4 ’22 to Q2 ’24)
| Quarter | ROE (%) | Gross Margin (%) | Operating Margin (%) | Net Margin (%) |
|---|---|---|---|---|
| Q4 ’22 | 17.93 | 63.34 | 20.77 | 23.37 |
| Q1 ’23 | 18.86 | 64.63 | 29.76 | 28.41 |
| Q2 ’23 | 40.21 | 70.05 | 50.34 | 45.81 |
| Q3 ’23 | 69.17 | 73.95 | 57.49 | 51.01 |
| Q4 ’23 | 91.46 | 75.97 | 61.59 | 55.58 |
| Q1 ’24 | 115.66 | 78.35 | 64.92 | 57.14 |
These ratios highlight NVIDIA’s ability to maximize profitability, further justifying the high valuations.
3. Revenue Breakdown by Segment and Geography
NVIDIA’s revenue growth has been driven by its strong performance in specific segments and geographic regions.
Revenue Breakdown by Segment:
- Compute & Networking:
- This segment has seen exponential growth, with revenue increasing from $15.07B in 2020 to $47.41B in 2023. The surge is primarily attributed to NVIDIA’s leadership in AI and data center markets.
- Graphics:
- Revenue from the Graphics segment has been stable, with a slight increase from $13.52B in 2020 to $13.91B in 2023, highlighting the sustained demand in gaming and professional visualization markets.
Table 5: Revenue Breakdown by Segment (2020 to 2023)
| Segment | 2020 (USD) | 2021 (USD) | 2022 (USD) | 2023 (USD) |
|---|---|---|---|---|
| Compute & Networking | 15.07B | 20.40B | 24.59B | 47.41B |
| Graphics | 11.91B | 13.52B | 13.91B | 13.91B |
| Graphics Processing Unit | 9.46B | — | — | — |
| Tegra Processor | 1.45B | — | — | — |
| All Other | — | — | — | — |
Revenue Breakdown by Geography:
- United States:
- The U.S. has emerged as the largest revenue contributor, with revenue growing from $8.29B in 2020 to $26.97B in 2023, reflecting the strong adoption of NVIDIA’s products in the domestic market.
- China (Including Hong Kong):
- Despite trade tensions, China remains a significant market, with revenue increasing from $5.79B in 2020 to $10.31B in 2023.
Table 6: Revenue Breakdown by Geography (2020 to 2023)
| Geography | 2020 (USD) | 2021 (USD) | 2022 (USD) | 2023 (USD) |
|---|---|---|---|---|
| United States | 8.29B | 13.52B | 20.40B | 26.97B |
| Taiwan | 6.99B | 10.31B | 13.91B | 13.91B |
| China (Including Hong Kong) | 5.79B | 7.11B | 10.31B | 10.31B |
| Other Countries | 5.91B | 6.91B | 10.24B | 10.24B |
4. Future Outlook and Conclusion
Looking ahead, NVIDIA’s growth trajectory appears to be on solid footing, with revenue expected to reach $32.12B. The company is well-positioned to continue its dominance in the AI, data center markets, autonomous vehicles and other emerging technologies.
NVIDIA’s consistent financial performance, coupled with its strategic investments in high-growth areas, makes it a compelling stock for long-term investors. However, the high valuation ratios suggest that any significant market disruptions could impact its stock price.
In conclusion, NVIDIA’s financial performance over the past few years has been remarkable. The company’s ability to consistently outperform market expectations and generate substantial profits positions it well for continued success in the future.
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