Nvidia stock analysis. NVDA stock.
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Nvidia is probably the hottest stock on the market right now. In fact, shares are up more than 30,000% since its IPO back in January 1999.
And it’s not hard to see why. Nvidia’s products are used in some of the fastest growing industries in the world like gaming and artificial intelligence.
Right now, the company has a market cap of 681 billion dollars. With 9.7 billion of long term debt and 3.4 billion of cash, the enterprise value is 687.5 billion.
Revenue over the last 12 months was 27 billion, net income was 4.4 billion and free cash flow was 5.2 billion.
So Nvidia stock is valued at an incredible 25 times revenue and 156 times earnings. To be sure, that makes Nvidia one of the most expensive stocks on the market as well.
At the moment, Nvidia reports its results in two operating segments:
- Compute & Networking (this includes their Data Center products, networking, automotive AI, crypto and much more).
And
- Graphics (this includes all of their GPU products))
These established brands allow the company to charge premium prices for premium quality.
What’s interesting is that the Compute & Networking segment grew 36% YoY while their Graphics segment decreased by 25% (This was mainly due to lower prices to reduce inventory levels and coming off the boom in 2021).
But overall, product innovation at Nvidia has been first class and has allowed the company to grow revenues almost 180% over the last 5 years.
However, it’s not all good news. Hardware is still a volatile business and Nvidia’s operating margin has decreased from 33% to 21% over the last five years. So the company is clearly not immune to increasing competition or market cycles.
#stocks #investing #nvdastock #stockstowatch
Visit our Substack for more: https://www.overlookedalpha.com
Nvidia is probably the hottest stock on the market right now. In fact, shares are up more than 30,000% since its IPO back in January 1999.
And it’s not hard to see why. Nvidia’s products are used in some of the fastest growing industries in the world like gaming and artificial intelligence.
Right now, the company has a market cap of 681 billion dollars. With 9.7 billion of long term debt and 3.4 billion of cash, the enterprise value is 687.5 billion.
Revenue over the last 12 months was 27 billion, net income was 4.4 billion and free cash flow was 5.2 billion.
So Nvidia stock is valued at an incredible 25 times revenue and 156 times earnings. To be sure, that makes Nvidia one of the most expensive stocks on the market as well.
At the moment, Nvidia reports its results in two operating segments:
- Compute & Networking (this includes their Data Center products, networking, automotive AI, crypto and much more).
And
- Graphics (this includes all of their GPU products))
These established brands allow the company to charge premium prices for premium quality.
What’s interesting is that the Compute & Networking segment grew 36% YoY while their Graphics segment decreased by 25% (This was mainly due to lower prices to reduce inventory levels and coming off the boom in 2021).
But overall, product innovation at Nvidia has been first class and has allowed the company to grow revenues almost 180% over the last 5 years.
However, it’s not all good news. Hardware is still a volatile business and Nvidia’s operating margin has decreased from 33% to 21% over the last five years. So the company is clearly not immune to increasing competition or market cycles.
#stocks #investing #nvdastock #stockstowatch
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NewsTranscript
00:00 Should you buy Nvidia stock? Nvidia is probably the hottest stock on the market right now.
00:05 In fact shares are up more than 30,000% since its IPO back in January 1999. And it's not
00:12 hard to see why. Nvidia's products are used in some of the fastest growing industries
00:16 in the world like gaming and artificial intelligence.
00:20 Right now the company has a market cap of $681 billion. With $9.7 billion of long term
00:26 debt and $3.4 billion of cash, the enterprise value is $687.5 billion. Revenue over the
00:32 last 12 months was $27 billion. Net income was $4.4 billion and free cash flow was $5.2
00:39 billion.
00:40 So Nvidia stock is valued at an incredible 25 times revenue and 156 times earnings. To
00:46 be sure, that makes Nvidia one of the most expensive stocks on the market as well.
00:51 At the moment Nvidia reports its results in two operating segments. Compute and Networking.
00:56 This includes their data center products, networking, automotive, AI, crypto and much
01:01 more. And Graphics. This includes all of their GPU products. These established brands allow
01:06 the company to charge premium prices for premium quality. What's interesting is that Compute
01:12 and Networking grew 36% year over year while their graphics segment has decreased by 25%.
01:19 This was mainly due to lower prices to reduce inventory levels and coming off the boom in
01:24 2021. But overall product innovation at Nvidia has been first class and has allowed the company
01:29 to grow revenues almost 180% over the last 5 years.
01:33 However it's not all good news. Hardware is still a volatile business and Nvidia's
01:38 operating margin has decreased from 33% to 21% over the last 5 years. So the company
01:44 is clearly not immune to increasing competition or market cycles. Right now analysts are expecting
01:50 growth of 11% in 2024, expanding to 25% in 2025 and 2026.
01:57 Let's jump ahead and assume that Nvidia can compound earnings at 30% per year for
02:01 the next 5 years and then the stock trades at 50 times those earnings in 5 years time.
02:06 In that scenario, the company would bring in roughly $16 billion in net income and be
02:11 worth $816 billion, which translates to an investment return of only 3.5% per year.
02:19 So Nvidia is clearly a great business and it's perfectly positioned for the boom in
02:23 artificial intelligence. But great success inevitably brings competition and let's
02:29 not forget the stock can be volatile. It dropped 90% in 2002 and it dropped 80% in 2008.
02:37 For those reasons I give Nvidia stock a bearish rating, that P/E ratio is just too high. But
02:42 these are my personal opinions, not financial advice and I've got no position in the stock.
02:47 For more detailed investing ideas, visit our newsletter, overlookedalpha.com.