In the past year, the NVIDIA Corporation (NVDA) has received significant attention from investors, spurred on by the burgeoning AI market. The tech titan's Graphics Processing Units (GPUs) have been met with great demand amongst AI developers, positioning NVIDIA as a potent force within the AI industry.
Notably, while the company demonstrates remarkable potential in AI, it is also reaping substantial profits in the sector. Yet despite impressive revenue growth in the last reported quarter, and fuelled by an upswing in AI GPU sales, NVIDIA continues to navigate complex macroeconomic challenges. Persistent export restrictions have been detrimental to sales with organizations in countries such as China.
With the current setting of regulations, NVIDIA anticipates a notable decline in sales in regions burdened by these export control measures in the current quarter. As the US tightens its grip on export controls, NVIDIA is diligently striving to develop China-specific chips, however, it must be noted the U.S. is poised to tighten those controls further in an attempt to prevent spikes in new technologies that would favor Beijing.
The delay in launching the Chinese-focused AI chips has led the NVDA stock to shrink by 2.6% over the past month. Although this recent dip may appear as an enticing investment opportunity, it is important to bear in mind that the stock could experience short-term upheaval. Looking at the broader perspective, it may be advisable to explore other potential chip stocks. Exploring key financial metrics can provide further insight into the current situation.
Analyzing NVIDIA Corporation's Financial Performance and Prospects from 2021 to 2023
The trailing-12-month Net Income of NVDA in the given period shows an overall upward trend with some fluctuations.
- Starting from January 2021, the Net Income was $4.33 billion.
- A consistent growth was seen over the following months, reaching a peak at $9.75 billion in January 2022.
- However, a significant downward fluctuation occurred after this point. By October 2022, the Net Income had fallen to $5.95 billion, marking a decrease of approximately 39% from its peak.
- This downward trend continued into the early part of 2023 when it bottomed out at $4.37 billion in January 2023.
- However, a reversal was observed by April 2023, when the Net Income began to increase again, reaching $4.79 billion.
- There was a substantial leap in the NVDA's Net Income in July 2023, where it hit $10.33 billion.
The most recent data from October 2023 indicates a surge in the Net Income of NVDA to a record high of $18.88 billion. In terms of growth rate calculated from the start to the end of the series, there is a considerable increase from $4.33 billion in January 2021 to $18.88 billion in October 2023. The growth rate in this case is approximately 336%. From the above, its important to note the emphasis on the volatility in performance, as reflected in the oscillating trend, alongside the impressive overall growth rate. Despite periods of downswing, the last value in the series suggests a strong upturn for the reported period.
The trailing-12-month revenue trend for NVDA has generally been on the rise over the span of the recorded data series. Here's the summary:
- Started at $16.68 billion in January 2021.
- Showed steady growth through 2021 and into the first half of 2022, peaking at $29.74 billion by July 2022.
- Experienced a short dip to $28.56 billion by October 30, 2022
- There was another decrease bringing the Revenue down to $25.88 billion by April 2023.
- In July 2023, there was a strong resurgence up to $32.68 billion
- A significant jump was observed by October 2023, where the Revenue hit a high of $44.87 billion.
Though the data series showed some fluctuations, the overall trend direction is upwards. Measuring from the start value in January 2021 to the last value in October 2023, NVDA experienced significant growth in its Revenue. The growth rate within this period is approximately 169%.
The reported Gross Margin of NVDA has experienced a series of fluctuations over the last three years.
- On January 31, 2021, the Gross Margin was at 62.3%.
- By May 2, 2021, there was a minor increase to 62.4%.
- A more notable increase occurred by August 1, 2021, as the Gross Margin rose to 63.8%.
- The upward trend continued through October 31, 2021, with the Gross Margin reaching 64.4%, and by January 30, 2022, hitting a peak of 64.9%.
- However, as of May 1, 2022, the Gross Margin started declining, falling to a low of 57.8% by October 30, 2022.
- By January 29, 2023, the Gross Margin kept decreasing to 56.9% and further fell to its lowest point of 56.3% on April 30, 2023.
- However, from July 30, 2023, there was a noticeable surge in the Gross Margin, with it rising sharply to 64.6%.
- This spike increased further, as by October 29, 2023, the Gross Margin had soared to its highest documented value of 69.9%.
The calculated growth rate from the initial 62.3% in January 2021 to the final recorded value of 69.9% in October 2023 reveals an overall positive trend despite the alternating upswing and downswing. Overall, NVDA's Gross Margin shows resilience with a substantial recovery in the latter part of the data series, signifying a potentially brighter future moving forward.
The Current Ratio of NVDA has shown significant fluctuations over the analyzed period from January 2021 to October 2023.
- On January 31, 2021, the Current Ratio was 4.09.
- It then peaked at 7.145 on October 31, 2021.
- Post this peak, there was a downward trend until the Current Ratio reached its lowest point, 2.787, in July 2023.
- The most recent value recorded, in October 2023, showed a rebound to 3.588.
Although October 2023's Current Ratio is lower than the initial value in January 2021, this marks a significant recovery from the previous quarter.
Growth: On comparing the first recorded value in January 2021 (4.09) to the most recent one in October 2023 (3.588), there is an overall decrease of about 12.22%.
Recent Trend: From 2022 onwards, the Current Ratio of NVDA faced a downtrend, reaching its lowest level in July 2023 (2.787). However, the latest data from October 2023 indicates a potential resurgence, with the figure climbing back up to 3.588. The fluctuation in NVDA’s Current Ratio throughout these years reflects the variances in the company's short-term liquidity and ability to cover its obligations.
Analyzing NVIDIA Corporation's Semi-Annual Stock Price Fluctuations and Trends
Based on the given data, it can be observed that the NVDA’s share price experienced a generally upward trend, with some fluctuation. Here are the trends in detail:
- Starting from June 23, 2023, the share price was $428.74.
- By the end of June 2023, there was a slight decrease to $413.50.
- In July 2023, the share price saw an increment, hitting a high at $461.01 on July 21.
- During the first two weeks of August 2023, there was a slight decrease, and the price dropped to $433.02 by August 11.
- Following this drop, there was a quick rebound, and the price peaked at $483.83 by September 1, 2023.
- The rest of September 2023 was characterized by a downward trend, reaching a low point at $426.26 by the end of the month.
- In October 2023, the trend started picking up again, reaching a value of $460.56 by mid-month, followed by a downfall to end at $418.70 by the end.
- November saw a swift rise to a high of $491.72 by the end of the month.
- In the first two weeks of December 2023, the share price experienced a small oscillation, finally settling at $474.96 on December 14, 2023.
Overall, over a span of about six months, the share price increased while experiencing several up and down fluctuations but without any clear accelerating or decelerating trends. In general, trends seem moderately volatile. Here is a chart of NVDA's price over the past 180 days.
Unveiling NVIDIA Corporation's Strong Performance: Growth, Quality, and Sentiment Analysis
NVDA has an overall C rating, translating to a Neutral in our POWR Ratings system. It is ranked #29 out of the 91 stocks in the Semiconductor & Wireless Chip category.
Based on the POWR Ratings, the three most noteworthy dimensions for NVDA are Growth, Quality, and Sentiment.
- In the Growth dimension, NASA's rating dramatically improved from 72 in June 2023 to a peak of 99 consistently from September 2023 onwards. The trend suggests a significant improvement in this dimension over the covered period.
- On the Quality aspect, NVDA maintained high ratings, starting at 91 in June 2023 and eventually rising to a steady 95 by September 2023.
- Lastly, the Sentiment dimension shows a consistently high trend throughout, starting at 94 in June 2023 and reaching its peak at 98 multiple times from September 2023 onwards.
These high ratings suggest that NVIDIA Corporation is demonstrating strong growth potential and maintaining exceptional quality and positive sentiment throughout the given time period.
How does NVIDIA Corporation (NVDA) Stack Up Against its Peers?
Other stocks in the Semiconductor & Wireless Chip sector that may be worth considering are ChipMOS TECHNOLOGIES INC. (IMOS), Everspin Technologies Inc. (MRAM), and STMicroelectronics N.V. (STM) -- they have better POWR Ratings.
What To Do Next?
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NVDA shares rose $0.72 (+0.15%) in premarket trading Friday. Year-to-date, NVDA has gained 231.03%, versus a 24.28% rise in the benchmark S&P 500 index during the same period.
About the Author: Subhasree Kar
Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics.
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