NVIDIA ($NVDA) - Good Price & Good Company. Find Out Here !
My afterthoughts to Tiger_chat 's question of whether an investor profits from a good company or a good price ?
"Why not both" I asked myself ?
Wouldn't there be more upsides comparatively speaking ?
Having put the theory to test on different company types (see below for details); time to try it another Semiconductor stock; the most popular one.
Putting $NVIDIA Corp(NVDA)$ to the test & see if it still fits the bill.
Sidetrack: Below are stocks that I have covered. Interested ? Click to read.
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An American multinational technology company
Founded on 05 Apr 1993. Its a 29 years “young” company
Founders were Jensen Huang (CEO),
Curtis Priem &
Chris Malachowsky
It is a software & fabless company which designs graphics processing units (GPUs), application programming interface (APIs) for data science and high-performance computing as well as system on a chip units (SoCs) for the mobile computing and automotive market.
It is a Global leader in artificial intelligence (AI) hardware & software
Its range of products & services could be found in the following areas of work - architecture, engineering & construction, media & entertainment, automotive, scientific research, manufacturing design, supercomputing, mobile computing,
Its competitors include - $Advanced Micro Devices(AMD)$ (details above) , $Intel(INTC)$ , $Qualcomm(QCOM)$ & Graphcore.
Went public on 22 Jan 1999 with an IPO price of $12 per share.
With an initial injection of $40,000 (1993); it has grown into a $580 Billion market cap company.
Its grown included venture capital funding from venture capitalist firm Sequoia Capital and of course its strategic acquisitions that allowed the firm to grow by leaps & bounds.
In 2022, a year where US market had been hammered by extreme volatility and ease of covid pandemic restrictions - how did semiconductor stock - Nvidia fare ?
Nvidia - Summary
Revenue came in at $6.05 Billion vs $6.0 Billion (Wall st expectations) vs $7.64 Billion (Q4 2022); tha’s a -20.81% decline.
Net income (GAAP) came in at $1.41 Billion vs $3.0 BIllion (Q4 2022); that’s a -53% decline.
Earning per share (GAAP) was $0.57 vs $1.18 (Q4 2022); that’s a -51.69% decline.
Earnings per share (non GAAP) was $0.88 vs $1.32 (Q4 2022); that’s a -33.33% decline.
Nvidia - Revenue by Market Platform
Despite Nvidia’s products & services are used by a diverse industry; it is both important and necessary to know which industry sector contributes “most” towards revenue accumulation
Looking at above, Nvidia’s AI chips for Automotive sector; seemed to hold the “biggest” potentials for this year - having gained > 100% revenue growth in Q4 2023; although its current “contribution” stands at 4.9% of total revenue.
Data centre “industrial” need for Nvidia’s chips in SuperComputing facilities is the next growth potential with a +11% gain in latest quarterly earnings. Incidentally, this sector contributes the lion’s share (59.8%) of total revenue.
Remaining 3 core businesses segments have shrank in revenue contribution with most significance from “Gaming” as it contributes 30.3% to total revenue.
With notebooks, tablets sales forecast to “stagnate” in immediate term (due to “hyperdrive over sale” due to covid lockdowns and internet communications was the only conduit); this sector will continue to remain “weak” in demand / sales / growth.
Nvidia - Other Highlights
Like its competitor (AMD) whose operating expenses have soared > 100% to $2.56 Billion; Nvidia is not far off too with expenses ballooned +27% to $2.58 Billion.
While both operating income (GAAP) & operating cash flow falling -58% & -26% respectively in a weak market
Free Cash Flow (FCF) still stands at a respectable $1.74 Billion
Nvidia's CEO on Q4 2023 Results
We are set to help customers take advantage of breakthroughs in generative AI and large langugage models. our new AI supercomputer, with H100 and its Transformer Engine and Quantum-2 networking fabric, is in full production. Gaming is recovering from the post-pandemic downturn, with gamers enthusiastically embracing the new Ada architecture GPUs with AI neural rendering.. Nvidia, CEO, Jensen Huang....
Is Nvidia - Both A Good Price and Good Company ?
Nvidia - current stock price < 25 Feb 2022 stock price by -4.51% only. Resilient !
Nvidia - Outlook for year 2023
CEO Jensen Huang has projected a “healthy” revenue for Q1 2024 to be at $6.5 Billion.
CEO is also optimistic about the immense potential for data center growth with the rise of large language models (LLMs) used to train AI systems eg. ChatGPT, Bing, that runs on GPU hardware from Nvidia.
Then there is collaborative work with Mercedes-Benz on “software-defined vehicles,” an advanced forward future something that many other automakers & tech companies are pursuing as well.
On 17 Nov 2022, it was announced that a collaboration with Lockheed Martin to build a digital twin of global weather conditions, enabling the U.S. National Oceanic and Atmospheric Admin to better monitor global environmental conditions, including extreme weather events.
On 03 Jan 2023 - a strategic partnership with Foxconn to develop automated and autonomous vehicle was formally announced; paving the way for Nvidia’s inclusion of Automobile electrification into its folder
On 22 Feb 2023 (Wed), $Microsoft(MSFT)$ has confirmed that it would bring Xbox PC games to Nvidia’s GeForce Now cloud gaming service, that would be a game-changer; setting a possible new standards to the Gaming Industry. Would this be the comeback ticket for Nvidia’s Gaming core business ?
Do you think now would be a good entry price for Nvidia ?
Do you see recovery for Nvidia by H1 2023 ?
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