Nvidia's Earnings Growth and Dividend Surge
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 3 days ago
0mins
Source: Fool
- Profitability Surge: Nvidia reported $81.62 billion in revenue and $53.54 billion in operating income for the latest quarter, achieving a remarkable 65.6% operating margin, showcasing its strong pricing power and demand from data center customers, positioning it to become the most profitable company globally.
- Buyback Program: Nvidia's stock buybacks surged to $44.5 billion over the past 12 months, with CFO Colette Kress forecasting a return of 50% of free cash flow to shareholders, despite holding over $13.24 billion in cash, significantly exceeding its $7.47 billion long-term debt.
- Significant Dividend Growth: Nvidia raised its dividend by 2,400% in its latest earnings report, projecting an annual payout of approximately $24.3 billion, making it the second-highest annual dividend expense among U.S. companies, even though its yield remains low at around 0.5%.
- Market Reaction: Despite Nvidia's stock declining after its last four earnings releases, it has consistently risen during each subsequent three-month period, indicating a market misunderstanding of its sustained growth potential, which investors should recognize for long-term opportunities.
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Analyst Views on NVDA
Wall Street analysts forecast NVDA stock price to rise
41 Analyst Rating
39 Buy
1 Hold
1 Sell
Strong Buy
Current: 214.250
Low
200.00
Averages
264.97
High
352.00
Current: 214.250
Low
200.00
Averages
264.97
High
352.00
About NVDA
NVIDIA Corporation is an artificial intelligence (AI) infrastructure company. The Company is engaged in accelerated computing to help solve the challenging computational problems. Its segments include Compute & Networking and Graphics. The Compute & Networking segment includes its Data Center accelerated computing and networking platforms and AI solutions and software, and automotive platforms and autonomous and electric vehicle solutions, including software. The Graphics segment includes GeForce GPUs for gaming and personal computers (PCs), and Quadro/NVIDIA RTX GPUs for enterprise workstation graphics. Its technology stack includes the foundational NVIDIA CUDA development platform that runs on all NVIDIA GPUs, as well as hundreds of domain-specific software libraries, frameworks, algorithms, software development kits (SDKs), and application programming interfaces (APIs). Its platforms address four markets, which include Data Center, Gaming, Professional Visualization, and Automotive.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Strong Capex Expectations: The four major hyperscalers are projected to spend around $650 billion on capital expenditures in 2023, with expectations to exceed $1 trillion by 2027, positioning Nvidia to benefit significantly from this massive spending, driving future growth.
- Significant Growth Rate: Nvidia's revenue grew by 85% year-over-year in Q1, a remarkable figure for a megacap company, suggesting that the market has yet to fully recognize its value; if valued similarly to peers, Nvidia's stock could be 2 to 3 times its current price, highlighting its undervalued potential.
- Increased Investment Confidence: With Nvidia's products at the core of a multitrillion-dollar infrastructure build-out, the unique combination of growth, value, and limited risk enhances investor confidence in its future performance, suggesting it will strongly outperform the S&P 500.
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- Potential Trillionaire: The rapid advancement of AI technology has sparked discussions about the possibility of the world's first trillionaire, suggesting immense wealth creation opportunities within the industry.
- Key Technology Supplier: A little-known company labeled as an 'Indispensable Monopoly' provides critical technology for both Nvidia and Intel, highlighting its importance and influence within the entire ecosystem.
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- Executive Departures Impact: The departure of two sales executives has heightened investor concerns, particularly as the company struggles to attract new customers, which could hinder future sales growth and market share.
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- Optimistic Future Outlook: The company anticipates Q2 FY2026 revenue of $22 billion, representing a 47% year-over-year increase, indicating substantial growth potential amid surging demand for AI processors.
- Market Share Leadership: With a 60% share of the ASIC market, Broadcom is well-positioned as ASIC shipments for AI servers are projected to rise nearly 45% in 2026, further solidifying its market dominance and driving revenue growth.
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- Optimistic Future Outlook: The company anticipates Q2 FY2026 revenue of $22 billion, representing a 47% year-over-year increase, indicating that revenue growth momentum will continue amid soaring demand for AI processors.
- Market Share Advantage: With a 60% share of the ASIC market, Broadcom is well-positioned as ASIC shipments for AI servers are expected to rise by nearly 45% in 2026, further solidifying its leadership in the AI chip market.
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- Revenue Concentration: In Q1, Nvidia reported total revenue of $81.6 billion, with $75.2 billion coming from its data center division, indicating a strong reliance on this segment, which may lead the company to further shift focus away from gaming to enhance its competitive edge in data centers.
- Strong Capex Expectations: The four major hyperscalers are projected to spend around $650 billion on capital expenditures in 2023, with expectations to exceed $1 trillion by 2027, positioning Nvidia to benefit significantly from this massive spending, driving future growth.
- Significant Growth Rate: Nvidia's revenue grew by 85% year-over-year in Q1, a remarkable figure for a megacap company, suggesting that the market has yet to fully recognize its value; if valued similarly to peers, Nvidia's stock could be 2 to 3 times its current price, highlighting its undervalued potential.
- Increased Investment Confidence: With Nvidia's products at the core of a multitrillion-dollar infrastructure build-out, the unique combination of growth, value, and limited risk enhances investor confidence in its future performance, suggesting it will strongly outperform the S&P 500.
See More
Nvidia's Dominance in Data Center Market Continues to Grow
- Market Dominance: Nvidia's increasing dominance in the data center market indicates its growing competitiveness in AI technology, which could significantly impact future market dynamics.
- Potential Trillionaire: The rapid advancement of AI technology has sparked discussions about the possibility of the world's first trillionaire, suggesting immense wealth creation opportunities within the industry.
- Key Technology Supplier: A little-known company labeled as an 'Indispensable Monopoly' provides critical technology for both Nvidia and Intel, highlighting its importance and influence within the entire ecosystem.
- Investment Advice: Despite Nvidia's strong market performance, the analyst team identified 10 best stocks that do not include Nvidia, advising investors to carefully consider their investment decisions.
See More
Zscaler Shares Plunge 30% After Weak Q3 Outlook
- Strong Revenue Performance: Zscaler reported a 25% year-over-year revenue increase in Q3, reaching $850.5 million, which surpassed management's previous guidance of $834-$836 million, indicating robust performance among existing customers.
- Weak Outlook Guidance: Despite solid revenue results, the company forecasts only a 22% revenue growth for Q4, estimating between $875 million and $878 million, which falls short of the $878.6 million consensus, reflecting management's cautious stance on future growth.
- Executive Departures Impact: The departure of two sales executives has heightened investor concerns, particularly as the company struggles to attract new customers, which could hinder future sales growth and market share.
- Lackluster ARR Growth: While the acquisition of Red Canary is projected to contribute $136 million in ARR, the overall ARR growth is expected to be only 16%-17%, indicating weakness in the core business and an uncertain growth outlook ahead.
See More
Microsoft and Nvidia to Launch New PCs at Upcoming Conferences
- Industry Conference Debut: Microsoft will join Nvidia next week at the Computex tradeshow in Taipei and the Build developer conference in San Francisco to unveil the first Windows computers powered by Nvidia chips, marking a significant collaboration in hardware innovation.
- Product Teaser: Nvidia teased the launch on social media, stating it will usher in a 'new era of PC' and provided coordinates for the Computex event, reflecting strong confidence and market anticipation for the new product.
- Developer Engagement: Microsoft's head of Windows and Devices, Pavan Davuluri, generated excitement among developers by hinting at new opportunities with the upcoming product, clarifying it is not a new OS version, which underscores Microsoft's commitment to its developer ecosystem.
- Market Reaction Anticipation: This launch is expected to elicit positive market reactions regarding the prospects of Microsoft and Nvidia's collaboration, particularly in high-performance computing and gaming sectors, further solidifying their leadership positions in the industry.
See More
Broadcom's Optimistic Outlook in AI Chip Market
- Significant Revenue Growth: Broadcom reported a 29% year-over-year revenue increase in Q1 FY2026 to $19.3 billion, with AI revenue soaring by 106% to $8.4 billion, highlighting the company's robust performance and rapid market demand in the AI sector.
- Optimistic Future Outlook: The company anticipates Q2 FY2026 revenue of $22 billion, representing a 47% year-over-year increase, indicating substantial growth potential amid surging demand for AI processors.
- Market Share Leadership: With a 60% share of the ASIC market, Broadcom is well-positioned as ASIC shipments for AI servers are projected to rise nearly 45% in 2026, further solidifying its market dominance and driving revenue growth.
- Upward Earnings Projections: Analysts forecast a 67% increase in Broadcom's earnings per share to $11.36 for FY2026, and with the rapid growth of AI revenue, the company's profitability is expected to significantly improve in the coming years, attracting more investor interest.
See More
Broadcom's AI Chip Market Growth Potential is Huge
- Accelerated Revenue Growth: Broadcom reported a 29% year-over-year revenue increase in Q1 FY2026 to $19.3 billion, while its AI revenue surged by 106% to $8.4 billion, highlighting the company's robust growth potential in the AI sector.
- Optimistic Future Outlook: The company anticipates Q2 FY2026 revenue of $22 billion, representing a 47% year-over-year increase, indicating that revenue growth momentum will continue amid soaring demand for AI processors.
- Market Share Advantage: With a 60% share of the ASIC market, Broadcom is well-positioned as ASIC shipments for AI servers are expected to rise by nearly 45% in 2026, further solidifying its leadership in the AI chip market.
- Upward Earnings Forecast: Analysts project a 67% increase in Broadcom's earnings per share to $11.36 for FY2026, and with the rapid growth of AI revenue, the company's profitability is set to significantly improve, driving stock price appreciation in the coming years.
See More
