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.
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