NVIDIA: ANALYSIS OF FINANCIAL RESULTS FOR FIRST QUARTER FISCAL 2023
On May 25, 2022, Nvidia Corporation reported its first quarter 2023 earnings. The results beat stock analysts speculations especially based on the last quarter’s outlook.
Key Takeaways of NVDA first quarter fiscal 2023
• Recorded quarterly revenue at $8.29 billion, exceeding the last quarter outlook of $8.10 billion, an increase of 8% from the last quarter.
• The data center services grew rapidly during the pandemic, increasing the demand for chips, transforming it into Nvidia’s largest platform
• Adjusted earnings per share (EPS) rose by 46.5% year over year.
NVDA is the largest producer of graphic chips used in the game industry and PCs. Based in Santa Clara, California; the NASDAQ listed company has seen success in technology over the past few years.
NVDA is listed in Stockbossup as one of the Top Metaverse stocks to buy in 2022
The company has an impressive economic moat by its ability to remain at the forefront of AI and crypto developments and is the largest semiconductor market.
Its significant success stems from the growing and insatiable market for Artificial Intelligence, which has helped create the multi-billion dollar business that is NVDA. It also leads in emerging tech discoveries such as VR/AR.
On the S&P 500, NVIDIA is one of the top ten companies by market value, at a market cap of $471 billion. The rating is not coincidental, as the total return of NVDA shares over the last year prove its might.
The shares have had a total return of 8.6%, surpassing the -5.9% total return of S&P 500's
Challenges NVDA faced over the last quarter
The demand for graphic processors has increased, but so have semiconductor prices. Business has become more expensive to conduct, which is a worrying factor for investors.
The surge in inflation and high interest rates have affected business, causing economic stagnation. Could these factors cripple the growth trajectory of NVDA in the future?
Generally, economic recession reduces the demand for semiconductors. This is because sales of cars, computers and factory equipment reduces, and consumers focus solely on purchasing FMCGs.
During economic meltdowns, products may build up overtime and become more difficult to clear out.
NVDA Data Center Revenue
The data center revenue grew to $3.75 billion, a 15% increase from the last quarter. The data center business is now the biggest platform of NVDA. Data center and gaming revenue hit a record high.
The company has a specialty in manufacturing chips for the gaming and graphics industry, which require graphics processing units (GPUs). The computational capability of GPUs in the industries above is also utilized in AI and machine learning.
These technologies are essential in the rapid growth of the data center market. The pandemic brought about a demand for remote computing. Most businesses communicated with their customers and served them online, without physical contact.
Many companies allowed their employees to work remotely. Most places of work and businesses have adopted the culture permanently.
The culture of remote working has boosted the market for chips used by data centers. Currently, there are many developments ongoing on the metaverse.
Metaverse is a virtual reality world. It is based on virtual reality and augmented reality technologies.
With the advancement of metaverse, demand for data center chips is expected to rise. Companies such as Meta are expected to create big business for NVDA in the near future, as they continue with their technological advancement.
GAAP Fiscal 2023 summary
($ in millions, except earnings per share) Q1 FY23
Revenue $8,288
Gross margin 65.5%
Operating expenses $3,563
Operating income $1,868
Net income $1,618
Diluted earnings per share $0.64
Source: NVIDIA News Room
Non-GAAP Fiscal 2023 summary
($ in millions, except earnings per share) Q1 FY23
Revenue $8,288
Gross margin 67.1%
Operating expenses $1,608
Operating income $3,955
Net income $3,443
Diluted earnings per share $1.36
Source: NVIDIA News Room
According to Jensen Huang, CEO NVIDIA, the company delivered record results in data center and gaming, even in the face of a challenging macro environment.
He further added that Industries utilizing AL computing are adopting NVIDIA, because of the high effectiveness of deep learning in automate intelligence.
NVIDIA Plans
• A high production of GPU, DPU, CPU and robotics processors ramping. Advanced Al graphics and increased technological impact in metaverse companies
Share repurchases
A major share repurchases and cash dividends occurred. The board of directors extended the common share repurchase program. The move made on May 23 2022, is set to extend to December 2023 to a tune of $15 billion.
The stock repurchase program is good news for the current investors, and future investors of NVDA. The program will boost the value of the stock.
I recommend a buy on NVDA stock ASAP, before the price hits the roof. It will pay eventually pay off to hold, since the stock is likely to maintain stability after the program.
The stock repurchases program shows that the company managers are optimistic of a significant growth trajectory in the coming quarters. The company is expected to pay the next quarterly cash dividend to all stakeholders on July 1, 2022, at $0.04 per share.
Key outlooks for the second quarter of fiscal 2023
Expected revenue figure is $8.10 billion, plus or minus 2%. The contraction from the current revenue owing to Russia tensions and lockdowns in China.
GAAP gross margin is expected to be 65.1% and Non-GAAP gross margin 67.1%. Include a plus or minus 50 basis points
GAAP and non-GAAP tax rates are expected to be 12.5%, plus or minus 1%, excluding any discrete items.
My Take
The pandemic increased the market for NVIDIA graphic chips, as more individuals and businesses relied on remote working.
Therefore, we expect NVIDIA products to remain in demand for a long while, since the future is tech.
The stock repurchase program and cash dividend program by NVIDIA directors will strengthen the performance and price of the stock. I would recommend a buy now and hold for 10yrs on NVDA stock.
I/we have a position in an asset mentioned
NVIDIA: ANALYSIS OF FINANCIAL RESULTS FOR FIRST QUARTER FISCAL 2023
On May 25, 2022, Nvidia Corporation reported its first quarter 2023 earnings. The results beat stock analysts speculations especially based on the last quarter’s outlook.
Key Takeaways of NVDA first quarter fiscal 2023
• Recorded quarterly revenue at $8.29 billion, exceeding the last quarter outlook of $8.10 billion, an increase of 8% from the last quarter.
• The data center services grew rapidly during the pandemic, increasing the demand for chips, transforming it into Nvidia’s largest platform
• Adjusted earnings per share (EPS) rose by 46.5% year over year.
NVDA is the largest producer of graphic chips used in the game industry and PCs. Based in Santa Clara, California; the NASDAQ listed company has seen success in technology over the past few years.
NVDA is listed in Stockbossup as one of the Top Metaverse stocks to buy in 2022 The company has an impressive economic moat by its ability to remain at the forefront of AI and crypto developments and is the largest semiconductor market.
Its significant success stems from the growing and insatiable market for Artificial Intelligence, which has helped create the multi-billion dollar business that is NVDA. It also leads in emerging tech discoveries such as VR/AR.
On the S&P 500, NVIDIA is one of the top ten companies by market value, at a market cap of $471 billion. The rating is not coincidental, as the total return of NVDA shares over the last year prove its might.
The shares have had a total return of 8.6%, surpassing the -5.9% total return of S&P 500's
Challenges NVDA faced over the last quarter
The demand for graphic processors has increased, but so have semiconductor prices. Business has become more expensive to conduct, which is a worrying factor for investors.
The surge in inflation and high interest rates have affected business, causing economic stagnation. Could these factors cripple the growth trajectory of NVDA in the future?
Generally, economic recession reduces the demand for semiconductors. This is because sales of cars, computers and factory equipment reduces, and consumers focus solely on purchasing FMCGs.
During economic meltdowns, products may build up overtime and become more difficult to clear out.
NVDA Data Center Revenue
The data center revenue grew to $3.75 billion, a 15% increase from the last quarter. The data center business is now the biggest platform of NVDA. Data center and gaming revenue hit a record high.
The company has a specialty in manufacturing chips for the gaming and graphics industry, which require graphics processing units (GPUs). The computational capability of GPUs in the industries above is also utilized in AI and machine learning.
These technologies are essential in the rapid growth of the data center market. The pandemic brought about a demand for remote computing. Most businesses communicated with their customers and served them online, without physical contact.
Many companies allowed their employees to work remotely. Most places of work and businesses have adopted the culture permanently.
The culture of remote working has boosted the market for chips used by data centers. Currently, there are many developments ongoing on the metaverse.
Metaverse is a virtual reality world. It is based on virtual reality and augmented reality technologies.
With the advancement of metaverse, demand for data center chips is expected to rise. Companies such as Meta are expected to create big business for NVDA in the near future, as they continue with their technological advancement.
GAAP Fiscal 2023 summary
($ in millions, except earnings per share) Q1 FY23
Revenue $8,288
Gross margin 65.5%
Operating expenses $3,563
Operating income $1,868
Net income $1,618
Diluted earnings per share $0.64
Source: NVIDIA News Room
Non-GAAP Fiscal 2023 summary
($ in millions, except earnings per share) Q1 FY23
Revenue $8,288
Gross margin 67.1%
Operating expenses $1,608
Operating income $3,955
Net income $3,443
Diluted earnings per share $1.36
Source: NVIDIA News Room
According to Jensen Huang, CEO NVIDIA, the company delivered record results in data center and gaming, even in the face of a challenging macro environment.
He further added that Industries utilizing AL computing are adopting NVIDIA, because of the high effectiveness of deep learning in automate intelligence.
NVIDIA Plans
• A high production of GPU, DPU, CPU and robotics processors ramping. Advanced Al graphics and increased technological impact in metaverse companies
Share repurchases
A major share repurchases and cash dividends occurred. The board of directors extended the common share repurchase program. The move made on May 23 2022, is set to extend to December 2023 to a tune of $15 billion.
The stock repurchase program is good news for the current investors, and future investors of NVDA. The program will boost the value of the stock. I recommend a buy on NVDA stock ASAP, before the price hits the roof. It will pay eventually pay off to hold, since the stock is likely to maintain stability after the program.
The stock repurchases program shows that the company managers are optimistic of a significant growth trajectory in the coming quarters. The company is expected to pay the next quarterly cash dividend to all stakeholders on July 1, 2022, at $0.04 per share.
Key outlooks for the second quarter of fiscal 2023
Expected revenue figure is $8.10 billion, plus or minus 2%. The contraction from the current revenue owing to Russia tensions and lockdowns in China.
GAAP gross margin is expected to be 65.1% and Non-GAAP gross margin 67.1%. Include a plus or minus 50 basis points
GAAP and non-GAAP tax rates are expected to be 12.5%, plus or minus 1%, excluding any discrete items.
My Take
The pandemic increased the market for NVIDIA graphic chips, as more individuals and businesses relied on remote working.
Therefore, we expect NVIDIA products to remain in demand for a long while, since the future is tech.
The stock repurchase program and cash dividend program by NVIDIA directors will strengthen the performance and price of the stock. I would recommend a buy now and hold for 10yrs on NVDA stock.
I/we have a position in an asset mentioned