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Why Is NVIDIA (NVDA) Up 16.4% Since Last Earnings Report?
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It has been about a month since the last earnings report for Nvidia (NVDA - Free Report) . Shares have added about 16.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is NVIDIA due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
NVIDIA Beat Q4 Earnings and Revenue Estimates
NVIDIA reported better-than-expected fourth-quarter fiscal 2024 results and provided strong guidance for the first quarter.
For the fiscal fourth quarter, NVIDIA reported non-GAAP earnings of $5.16 per share, which beat the Zacks Consensus Estimate by 13.4%. Moreover, the reported figure soared a whopping 486% year over year while increasing 28% sequentially. The robust increase in earnings was mainly driven by higher revenues and improvement in gross margin.
Fiscal fourth-quarter revenues more than tripled on a year-over-year basis and climbed 22% sequentially to $22.1 billion. The robust growth in the top line was mainly driven by record sales in the Data Center end market and higher sell-ins to partners across the Gaming and Professional Visualization end markets following the normalization of channel inventory. The top line also beat the consensus mark of $20.31 billion.
Segment Details
NVIDIA reports revenues under two segments — Graphics and Compute & Networking.
Graphics includes GeForce GPUs for gaming and personal computers, the GeForce NOW game-streaming service and related infrastructure. The segment also offers solutions for gaming platforms, Quadro GPUs for enterprise design, GRID software for cloud-based visual and virtual computing and automotive platforms for infotainment systems.
Graphics accounted for 19% of fiscal fourth-quarter revenues. The segment’s top line soared 77% year over year while increasing 21% sequentially to $4.21 billion. Our fiscal fourth-quarter revenue estimate for the Graphics segment was pegged at $4.19 billion.
Compute & Networking represented 81% of fiscal fourth-quarter revenues. The segment comprises Data Center platforms and systems for artificial intelligence, high-performance computing and accelerated computing, the DRIVE development platform for autonomous vehicles and Jetson for robotics and other embedded platforms.
Compute & Networking revenues soared 387% year over year and 22% sequentially to $17.9 billion. Our fiscal fourth-quarter revenue estimate for this segment was pegged at $15.88 billion.
Market Platform’s Top Line Details
Based on the market platform, Gaming revenues increased 56% year over year and were flat sequentially at $2.87 billion, accounting for 13% of the total revenues. The year-over-year surge reflects increased sales to channel partners following the normalization of inventory and increased sales of its GeForce RTX 40 SUPER series family of GPUs (graphics processing units). Our estimate for the Gaming end-market’s fourth-quarter revenues was pegged at $2.83 billion.
Revenues from Data Center (83.3% of revenues) jumped 409% year over year and 27% from the previous quarter to $18.4 billion. This robust rise was mainly driven by higher shipments of the Hopper GPU computing platform used for the training and inference of large language models, recommendation engines and generative AI applications, along with InfiniBand end-to-end solutions.
NVIDIA witnessed strong demand for its chips used in datacenter by enterprise software and consumer Internet applications, and multiple industry verticals, including automotive, financial services and healthcare. During the fiscal fourth quarter, large cloud providers represented more than half of Data Center revenues. Additionally, Data Center sales to China declined significantly in the quarter due to the U.S. government licensing requirements.
The segment also experienced traction from its Cloud Service Provider (CSP) customer base both in Hyperscale and GPU-specialized CSPs globally. Our estimate for this end-market’s fiscal fourth-quarter revenues was pegged at $16.43 billion.
Professional Visualization revenues (2.1% of revenues) increased 105% year over year and 11% sequentially to $416 million. The increase was primarily driven by higher sell-in to partners following inventory normalization while the sequential increase was driven by the ramp of desktop workstations based on the Ada Lovelace GPU architecture. Our estimate for the Professional Visualization end-market’s fiscal fourth-quarter revenues was pegged at $433.3 million.
Automotive sales (1.3% of revenues) in the reported quarter totaled $281 million, down 4% on a year-over-year basis but up 8% sequentially. The sequential rise was mainly driven by self-driving platforms. Our estimate for this end-market’s fiscal fourth-quarter revenues was pegged at $294.5 million.
OEM and Other revenues (0.3% of revenues) were up 7% year over year and 23% sequentially to $90 million. Our fiscal fourth-quarter revenue estimate for this end market was pegged at $84.8 million.
Operating Details
NVIDIA’s non-GAAP gross margin increased to 76.7% from 66.1% in the year-ago quarter and 75% from the previous quarter, mainly driven by higher Data Center sales and benefits from favorable component costs.
Non-GAAP operating expenses increased 25% year over year and 9% sequentially to $2.21 billion. The increase was due to higher compensations and related benefits. However, as a percentage of total revenue, non-GAAP operating expenses declined to 10% from 29.3% in the year-ago quarter and 11.2% in the previous quarter.
The non-GAAP operating income jumped 563% year over year and 28% sequentially to $14.75 billion, primarily driven by higher revenues, along with an improved gross margin and lower operating expenses as a percentage of sales.
Balance Sheet and Cash Flow
As of Jan 28, 2024, NVDA’s cash, cash equivalents and marketable securities were $25.98 billion, up from $18.28 billion as of Oct 29, 2023. As of Jan 28, 2024, the total long-term debt was $8.46 billion, almost flat with $8.45 billion at the end of the third quarter.
NVIDIA generated $11.5 billion in operating cash flow, up from the year-ago quarter’s $2.25 billion and the previous quarter’s $7.33 billion. In fiscal 2024, it generated an operating cash flow of $28.09 billion, up from $5.64 billion in fiscal 2023.
The company ended the fiscal fourth quarter and fiscal 2024 with free cash flow of $11.22 billion and $26.95 billion, respectively.
In the fiscal fourth quarter, the company returned $99 million to shareholders through dividend payouts and repurchased stocks worth $2.8 billion. In fiscal 2024, the company paid out $395 million in dividends and bought back stocks worth $9.5 billion.
In the quarter, it had a remaining share-repurchase authorization of approximately $22.44 billion, which has no expiration time.
Guidance
For the first quarter of fiscal 2025, NVIDIA anticipates revenues of $24 billion (+/-2%). The GAAP and non-GAAP gross margins are projected at 73.6% and 77%, respectively (+/-50 bps). GAAP and non-GAAP operating expenses are estimated at $3.5 billion and $2.5 billion, respectively.
GAAP and non-GAAP other income and expenses, excluding gains and losses from non-affiliated investments, are anticipated to be an income of approximately $250 million. The GAAP and non-GAAP tax rate for the quarter is estimated at 17% (+/- 1%).
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
The consensus estimate has shifted 16.49% due to these changes.
VGM Scores
At this time, NVIDIA has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. However, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise NVIDIA has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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Why Is NVIDIA (NVDA) Up 16.4% Since Last Earnings Report?
It has been about a month since the last earnings report for Nvidia (NVDA - Free Report) . Shares have added about 16.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is NVIDIA due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
NVIDIA Beat Q4 Earnings and Revenue Estimates
NVIDIA reported better-than-expected fourth-quarter fiscal 2024 results and provided strong guidance for the first quarter.
For the fiscal fourth quarter, NVIDIA reported non-GAAP earnings of $5.16 per share, which beat the Zacks Consensus Estimate by 13.4%. Moreover, the reported figure soared a whopping 486% year over year while increasing 28% sequentially. The robust increase in earnings was mainly driven by higher revenues and improvement in gross margin.
Fiscal fourth-quarter revenues more than tripled on a year-over-year basis and climbed 22% sequentially to $22.1 billion. The robust growth in the top line was mainly driven by record sales in the Data Center end market and higher sell-ins to partners across the Gaming and Professional Visualization end markets following the normalization of channel inventory. The top line also beat the consensus mark of $20.31 billion.
Segment Details
NVIDIA reports revenues under two segments — Graphics and Compute & Networking.
Graphics includes GeForce GPUs for gaming and personal computers, the GeForce NOW game-streaming service and related infrastructure. The segment also offers solutions for gaming platforms, Quadro GPUs for enterprise design, GRID software for cloud-based visual and virtual computing and automotive platforms for infotainment systems.
Graphics accounted for 19% of fiscal fourth-quarter revenues. The segment’s top line soared 77% year over year while increasing 21% sequentially to $4.21 billion. Our fiscal fourth-quarter revenue estimate for the Graphics segment was pegged at $4.19 billion.
Compute & Networking represented 81% of fiscal fourth-quarter revenues. The segment comprises Data Center platforms and systems for artificial intelligence, high-performance computing and accelerated computing, the DRIVE development platform for autonomous vehicles and Jetson for robotics and other embedded platforms.
Compute & Networking revenues soared 387% year over year and 22% sequentially to $17.9 billion. Our fiscal fourth-quarter revenue estimate for this segment was pegged at $15.88 billion.
Market Platform’s Top Line Details
Based on the market platform, Gaming revenues increased 56% year over year and were flat sequentially at $2.87 billion, accounting for 13% of the total revenues. The year-over-year surge reflects increased sales to channel partners following the normalization of inventory and increased sales of its GeForce RTX 40 SUPER series family of GPUs (graphics processing units). Our estimate for the Gaming end-market’s fourth-quarter revenues was pegged at $2.83 billion.
Revenues from Data Center (83.3% of revenues) jumped 409% year over year and 27% from the previous quarter to $18.4 billion. This robust rise was mainly driven by higher shipments of the Hopper GPU computing platform used for the training and inference of large language models, recommendation engines and generative AI applications, along with InfiniBand end-to-end solutions.
NVIDIA witnessed strong demand for its chips used in datacenter by enterprise software and consumer Internet applications, and multiple industry verticals, including automotive, financial services and healthcare. During the fiscal fourth quarter, large cloud providers represented more than half of Data Center revenues. Additionally, Data Center sales to China declined significantly in the quarter due to the U.S. government licensing requirements.
The segment also experienced traction from its Cloud Service Provider (CSP) customer base both in Hyperscale and GPU-specialized CSPs globally. Our estimate for this end-market’s fiscal fourth-quarter revenues was pegged at $16.43 billion.
Professional Visualization revenues (2.1% of revenues) increased 105% year over year and 11% sequentially to $416 million. The increase was primarily driven by higher sell-in to partners following inventory normalization while the sequential increase was driven by the ramp of desktop workstations based on the Ada Lovelace GPU architecture. Our estimate for the Professional Visualization end-market’s fiscal fourth-quarter revenues was pegged at $433.3 million.
Automotive sales (1.3% of revenues) in the reported quarter totaled $281 million, down 4% on a year-over-year basis but up 8% sequentially. The sequential rise was mainly driven by self-driving platforms. Our estimate for this end-market’s fiscal fourth-quarter revenues was pegged at $294.5 million.
OEM and Other revenues (0.3% of revenues) were up 7% year over year and 23% sequentially to $90 million. Our fiscal fourth-quarter revenue estimate for this end market was pegged at $84.8 million.
Operating Details
NVIDIA’s non-GAAP gross margin increased to 76.7% from 66.1% in the year-ago quarter and 75% from the previous quarter, mainly driven by higher Data Center sales and benefits from favorable component costs.
Non-GAAP operating expenses increased 25% year over year and 9% sequentially to $2.21 billion. The increase was due to higher compensations and related benefits. However, as a percentage of total revenue, non-GAAP operating expenses declined to 10% from 29.3% in the year-ago quarter and 11.2% in the previous quarter.
The non-GAAP operating income jumped 563% year over year and 28% sequentially to $14.75 billion, primarily driven by higher revenues, along with an improved gross margin and lower operating expenses as a percentage of sales.
Balance Sheet and Cash Flow
As of Jan 28, 2024, NVDA’s cash, cash equivalents and marketable securities were $25.98 billion, up from $18.28 billion as of Oct 29, 2023. As of Jan 28, 2024, the total long-term debt was $8.46 billion, almost flat with $8.45 billion at the end of the third quarter.
NVIDIA generated $11.5 billion in operating cash flow, up from the year-ago quarter’s $2.25 billion and the previous quarter’s $7.33 billion. In fiscal 2024, it generated an operating cash flow of $28.09 billion, up from $5.64 billion in fiscal 2023.
The company ended the fiscal fourth quarter and fiscal 2024 with free cash flow of $11.22 billion and $26.95 billion, respectively.
In the fiscal fourth quarter, the company returned $99 million to shareholders through dividend payouts and repurchased stocks worth $2.8 billion. In fiscal 2024, the company paid out $395 million in dividends and bought back stocks worth $9.5 billion.
In the quarter, it had a remaining share-repurchase authorization of approximately $22.44 billion, which has no expiration time.
Guidance
For the first quarter of fiscal 2025, NVIDIA anticipates revenues of $24 billion (+/-2%). The GAAP and non-GAAP gross margins are projected at 73.6% and 77%, respectively (+/-50 bps). GAAP and non-GAAP operating expenses are estimated at $3.5 billion and $2.5 billion, respectively.
GAAP and non-GAAP other income and expenses, excluding gains and losses from non-affiliated investments, are anticipated to be an income of approximately $250 million. The GAAP and non-GAAP tax rate for the quarter is estimated at 17% (+/- 1%).
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
The consensus estimate has shifted 16.49% due to these changes.
VGM Scores
At this time, NVIDIA has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. However, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise NVIDIA has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.