To The Moon

After the market closed yesterday, $NVIDIA Corp(NVDA)$ , the king of AI, released its fourth-quarter report for the fiscal year 2024 (as of January 28 this year), which greatly exceeded market expectations:

Nvidia's shares surged 9% after hours, driving a surge in AI concept stocks such as $ARM Holdings Ltd(ARM)$ $Advanced Micro Devices(AMD)$ $ASML Holding NV(ASML)$ $Taiwan Semiconductor Manufacturing(TSM)$, and even shaking the entire US stock market:

Specifically, Nvidia's revenue in the fourth quarter of $22.1 billion, significantly more than the $20 billion guidance given by management, and significantly higher than the $20.4 billion expected by analysts, with a year-over-year increase of 265.3%:

By products, Data Center revenue was $18.4 billion, a year-on-year surge of 409%, exceeding analyst expectations of $17.2 billion, accounting for 83% of total revenue, mainly driven by AI GPUs.

Gaming business revenue was $2.865 billion, an increase of 56.5%, slightly exceeding analyst expectations of $2.72 billion, mainly driven by PC sales recovery and digital currency surge, as well as the end of inventory depletion by manufacturers.

Automotive chip revenue was $280 million, down 4.4% year-on-year, affected by automotive plant destocking and slowing sales of new energy vehicles, but fiscal 2024 revenue broke the $1 billion mark for the first time, reaching $1.09 billion:

Professional visualization and other businesses also beat expectations, but because of the smaller size of the revenue and less growth than Data Center and Automotive chips, I won't go into the details here.

Despite supply constraints and unexpected cost declines for components, Nvidia's profitability also exceeded market expectations. Specifically, the gross margin for the fourth quarter was 76%, exceeding the management's guidance of 74.5%, and the net profit margin reached an astonishing 55.6%!

Nvidia expects the gross margin for the next quarter to reach 76.3%, setting another record!

However, the decline in component costs is not sustainable, and the management expects the subsequent gross margin to approach 70%, which is still much higher than before the AI boom!

In addition to exceeding expectations in the fourth quarter, the revenue guidance for the next quarter is $24 billion, also exceeding analyst expectations of $22 billion!

During the earnings conference call, Nvidia CEO Jensen Huang stated that the current AI demand remains strong and has not yet shown signs of slowing down. The next-generation products are still facing supply constraints. Moreover, he claimed that "accelerated computing and generative AI have reached a tipping point, and demand is surging globally across companies, industries, and countries."

By regional sales, all regions experienced growth in the fourth quarter, except for China, which declined due to the US chip ban. Among them, the United States contributed $12.2 billion, an increase of 94%, non-China other countries revenue $7.99 billion, an increase of 131% quarter-on-quarter.

China's share of revenue fell from 22.2% in the third quarter to 8.8%, and it is expected to remain the same in the next quarter. This situation may improve after the launch of China-specific GPUs.

Although the chip ban has hindered Nvidia's sales in China, considering the massive demand for AI, the impact is not significant.

The more advanced H200 GPU is expected to ship in the second quarter, and Nvidia remains the coolest kid in AI!

After the surge, many people are worried that NVIDIA has a bubble. But looking at the current situation, NVIDIA's revenue in fiscal year 2025 is expected to reach $100 billion,with a market capitalization of $1.8 trillion and a price-to-sales ratio of 18 times. Compared to history, this valuation is not expensive.

It's worth noting that NVIDIA's profitability with the help of AI has surpassed its historical levels, and it deserves a higher valuation. During the semiconductor bull market in 2021, NVIDIA's price-to-sales ratio once exceeded 30 times, driven by data centers and digital currencies.

The AI wave is far superior to traditional data centers and digital currencies, and there will inevitably be a bubble. At that time, NVIDIA's valuation should far exceed that of 2021. Boldly predicting, NVIDIA may still have the potential to double!