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NVIDIA

Nasdaq:NVDA
Snowflake Description

Outstanding track record with reasonable growth potential.

The Snowflake is generated from 30 checks in 5 different areas, read more below.
NVDA
Nasdaq
$131B
Market Cap
  1. Semiconductors and Semiconductor Equipment
Company description

NVIDIA Corporation operates as a visual computing company worldwide. More info.


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3 Month History
NVDA
Industry
5yr Volatility vs Market

Value

 Is NVIDIA undervalued based on future cash flows and its price relative to the stock market?

Value is all about what a company is worth versus what price it is available for. If you went into a grocery store and all the bananas were on sale at half price, they could be considered undervalued.
INTRINSIC VALUE BASED ON FUTURE CASH FLOWS
Here we compare the current share price of NVIDIA to its discounted cash flow analysis.value.

The discounted cash flow value is simply looking at what the company is worth today, based on estimates of how much money it is expected to make in the future.

How is this discounted cash flow calculated?

  • The current share price of NVIDIA is above its future cash flow value.
Often investors are willing to pay a premium for a company that has a high dividend or the potential for future growth.
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for it. This is similar to the price of fruit (e.g. Mangoes or Avocados) increasing when they are out of season, or how much your home is worth.

The amount the stock market is willing to pay for NVIDIA's earnings, growth and assets is considered below, and whether this is a fair price.
Price based on past earnings
Are NVIDIA's earnings available for a low price, and how does this compare to other companies in the same industry?
  • NVIDIA is overvalued based on earnings compared to the US Semiconductors and Semiconductor Equipment industry average.
  • NVIDIA is overvalued based on earnings compared to the US market.
Price based on expected Growth
Does NVIDIA's expected growth come at a high price?
  • NVIDIA is poor value based on expected growth next year.
Price based on value of assets
What value do investors place on NVIDIA's assets?
  • NVIDIA is overvalued based on assets compared to the US Semiconductors and Semiconductor Equipment industry average.
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Value checks
We assess NVIDIA's value by looking at:
  1. Is the discounted cash flow value less than 20%, or 40% of the share price? (2 checks) ( Click here or on bar chart for details of DCF calculation. )
  2. Is the PE ratio less than the market average, and/ or less than the Semiconductors and Semiconductor Equipment industry average (and greater than 0)? (2 checks)
  3. Is the PEG ratio within a reasonable range (0 to 1)? (1 check)
  4. Is the PB ratio less than the Semiconductors and Semiconductor Equipment industry average (and greater than 0)? (1 check)
  5. NVIDIA has a total score of 0/6, see the detailed checks below.

    Note: We use GAAP Earnings per Share in all our calculations including PE and PEG Ratio.
    Note 2: PEG ratio is based on analysts EPS growth expectations in 1 year (3.93%).

    Full details on the Value part of the Simply Wall St company analysis model.
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Discounted cash flow (2 Stage Free Cash Flow to Equity)

The calculations below outline how an intrinsic value for NVIDIA is arrived at by discounting future cash flows to their present value. We use analyst's estimates of cash flows going forward 5 years.

See our documentation to learn about this calculation.

5 year cash flow forecast

Present value of next 5 years cash flows:
$10,750

Terminal Value

Terminal Value = FCF2021 × (1 + g) ÷ (Discount Rate – g)

Terminal Value = $4,110 × (1 + 2.47%) ÷ (10.16% – 2.47%)

Terminal value based on the Perpetuity Method where growth (g) = 2.47%:
$54,796

Present value of terminal value:
$33,783

Equity Value

Equity Value (Total value) = Present value of next 5 years cash flows + terminal value
$44,534 = $10,750 + $33,783

Value = Total value / Shares Outstanding ($44,534 / 606)

Discount to Share Price

Value per share:
$73.49

Current discount (share price of $214.93): -192.47%



Estimate of Discount Rate

The discount rate, or required rate of return, is estimated by calculating the Cost of Equity.

Discount rate = Cost of Equity = Risk Free Rate + (Levered Beta * Equity Risk Premium)

Discount rate = 10.16% = 2.47% + (1.021 * 7.53%)



Estimate of Bottom Up Beta

The Levered Beta is the Unlevered Beta adjusted for financial leverage. It is limited to 0.8 to 2.0 (practical range for a stable firm). Note the market value of equity is used not the book value ($130,926,300,000).

Levered Beta = Unlevered beta (1 + (1- tax rate) (Debt/Equity))

1.021 = 1.01 (1 + (1- 30%) (1.53%))

Levered Beta used in calculation = 1.021



Assumptions
  1. The risk free rate of 2.47% is from the 10 year government bond rate in USD.
  2. The bottom-up beta is estimated by analysing other companies in the same industry.
  3. The Equity Risk Premium is calculated by subtracting the risk free rate from the market return premium (7.53%) (source: Buffet).
  4. The dividend discount model is automatically used for companies in the following industries: Banks, Insurance, Real Estate Investment Trusts (REITs), Diversified Financial Services and Capital Markets.

Future Performance

 How is NVIDIA expected to perform in the next 1 to 3 years based on estimates from 33 analysts?

The future performance of a company is measured in the same way as past performance, by looking at estimated growth and how much profit it is expected to make.

Future estimates come from professional analysts. Just like forecasting the weather, they don’t always get it right!
Annual Growth Rate
17.1%
Expected annual growth in earnings.
Earnings growth vs Low Risk Savings
Is NVIDIA expected to grow at an attractive rate?
  • NVIDIA's earnings growth is expected to exceed the low risk savings rate of 3.6%.
Growth vs Market Checks
  • NVIDIA's earnings growth is expected to exceed the US market average.
  • NVIDIA's revenue growth is expected to exceed the US market average.
Annual Growth Rates Comparison
Analysts growth expectations
Super high growth metrics
High Growth Checks
  • NVIDIA's earnings are expected to grow by 17.1% yearly, however this is not considered high growth (20% yearly).
  • NVIDIA's revenue is expected to grow by 15.8% yearly, however this is not considered high growth (20% yearly).
Past and Future Earnings per Share
The accuracy of the analysts who estimate the future performance data can be gauged below. We look back 3 years and see if they were any good at predicting what actually occurred. We also show the highest and lowest estimates looking forward to see if there is a wide range.
Performance in 3 years
In the same way as past performance we look at the future estimated return (profit) compared to the available funds. We do this looking forward 3 years.
  • NVIDIA is expected to perform strongly, Return on Equity (ROE) in 3 years is estimated to be above 20%.

Improvement & Relative to industry
  • Performance (ROE) is expected to be above the current US Semiconductors and Semiconductor Equipment industry average.
  • A decline in NVIDIA's performance (ROE) is expected over the next 3 years.
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Future performance checks
We assess NVIDIA's future performance by looking at:
  1. Is the annual earnings growth rate expected to beat the low risk savings rate, plus a premium to keep pace with inflation?
  2. Is the annual earnings growth rate expected to beat the average growth rate in earnings of the US market? (1 check)
  3. Is the annual revenue growth rate expected to beat the average growth rate in revenue of the US market? (1 check)
  4. Is the annual earnings growth rate expected to be above 20%? (1 check)
  5. Is the annual revenue growth rate expected to be above 20%? (1 check)
  6. Is the Return on Equity in 3 years expected to be over 20%? (1 check)
Some of the above checks will fail if the company is expected to be loss making in the relevant year.
NVIDIA has a total score of 4/6, see the detailed checks below.

Note 1: We use GAAP Net Income Excluding Exceptional Items for our Earnings in all our calculations.

Full details on the Future part of the Simply Wall St company analysis model.

Past Performance

  How has NVIDIA performed over the past 5 years?

The past performance of a company can be measured by how much growth it has experienced and how much profit it makes relative to the funds and assets it has available.
Past earnings growth
Below we compare NVIDIA's growth in the last year to its industry (Semiconductors and Semiconductor Equipment).
Past Earnings growth analysis
We also check if the company has grown in the past 5 years, and whether it has maintained that growth in the year.
  • NVIDIA's year on year earnings growth rate has been positive on average over the past 5 years.
  • NVIDIA's 1 year earnings growth exceeds its 5 year annual average (112.4% vs 26.6%)
  • NVIDIA's earnings growth has exceeded the US Semiconductors and Semiconductor Equipment industry average in the past year (112.4% vs 35.1%).
Earnings and Revenue History
NVIDIA's revenue and profit over the past 5 years is shown below, any years where they have experienced a loss will show up in red.
Performance last year
We want to ensure a company is making the most of what it has available. This is done by comparing the return (profit) to a company's available funds, assets and capital.
  • Strong return on shareholders funds (ROE > 20%) last year.
  • NVIDIA performed above the US Semiconductors and Semiconductor Equipment industry average based on Return on Assets (ROA) last year.
  • Performance based on Return on Capital Employed (ROCE) has improved significantly over 3 years.
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Past performance checks
We assess NVIDIA's performance over the past 5 years by checking for:
  1. Has earnings increased in past 5 years? (1 check)
  2. Has the earnings growth in the last year exceeded that of the Semiconductors and Semiconductor Equipment industry? (1 check)
  3. Is the recent earnings growth over the last year higher than the average annual growth over the past 5 years? (1 check)
  4. Is the Return on Equity (ROE) higher than 20%? (1 check)
  5. Is the Return on Assets (ROA) above industry average? (1 check)
  6. Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
The above checks will fail if the company has reported a loss in the most recent earnings report. Some checks require at least 3 or 5 years worth of data.
NVIDIA has a total score of 6/6, see the detailed checks below.

Note: We use GAAP Net Income excluding extraordinary items in all our calculations.

Full details on the Past part of the Simply Wall St company analysis model.

Health

 How is NVIDIA's financial health and their level of debt?

A company's financial position is much like your own financial position, it includes everything you own (assets) and owe (liabilities).

The boxes below represent the relative size of what makes up NVIDIA's finances.

The net worth of a company is the difference between its assets and liabilities.
Net Worth
  • NVIDIA is able to meet its short term (1 year) commitments with its holdings of cash and other short term assets.
  • NVIDIA's cash and other short term assets cover its long term commitments.
Balance sheet
This treemap shows a more detailed breakdown of NVIDIA's finances. If any of them are yellow this indicates they may be out of proportion and red means they relate to one of the checks below.
Assets
Liabilities and shares
The 'shares' portion represents any funds contributed by the owners (shareholders) and any profits.
  • Low level of unsold assets.
  • Total debt is covered by total short term assets, assets are 4.2x debt.
Historical Debt
Nearly all companies have debt. Debt in itself isn’t bad, however if the debt is too high, or the company can’t afford to pay the interest on its debts this may have impacts in the future.

The graphic below shows equity (available funds) and debt, we ideally want to see the red area (debt) decreasing.

If there is any debt we look at the companies capability to repay it, and whether the level has increased over the past 5 years.
  • NVIDIA's level of debt (31.6% of total debt) compared to net worth is satisfactory (less than 40%).
  • The level of debt compared to net worth has increased over the past 5 years (0.4% vs 31.6% today).
  • Total debt is well covered by annual operating cash flow (106.5%, greater than 20% of total debt).
  • No interest on debt data available.
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Financial health checks
We assess NVIDIA's financial health by checking for:
  1. Are short term assets greater than short term liabilities? (1 check)
  2. Are short term assets greater than long term liabilities? (1 check)
  3. Has the debt to equity ratio increased in the past 5 years? (1 check)
  4. Is the debt to equity ratio over 40%? (1 check)
  5. Is the debt covered by short term assets? (1 check)
  6. Are earnings greater than 5x the interest on debt (if company pays interest at all)? (1 check)
  7. NVIDIA has a total score of 4/6, see the detailed checks below.


Full details on the Health part of the Simply Wall St company analysis model.

Dividends

 What is NVIDIA's current dividend yield, its reliability and sustainability?

Dividends are regular cash payments to you from the company, similar to a bank paying you interest on a savings account.
Annual Dividend Income
Dividend payments
0.28%
Current annual income from NVIDIA dividends. Estimated to be 0.27% next year.
If you bought $2,000 of NVIDIA shares you are expected to receive $0 in your first year as a dividend.
Dividend Amount
Here we look how much dividend is being paid, if any. Is it above what you can get in a savings account? It is up there with the best dividend paying companies?
  • Paying below low risk savings rate (2.25%).
  • Paying below markets top dividend payers (3.18%).
Historical and Future Dividends
It is important to see if the dividend for a company is stable, and not wildly increasing/decreasing each year. This graph shows you the historical rate to count toward your assessment of the stock.

We also check to see if the dividend has increased in the past 10 years.
  • Not paying a notable dividend.
  • Not paying a notable dividend.
Current Payout to shareholders
What portion of NVIDIA's earnings are paid to the shareholders as a dividend.
  • Not paying a notable dividend.
Future Payout to shareholders
  • Insufficient estimate data to determine if a dividend will be paid in 3 years.
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Income/ dividend checks
We assess NVIDIA's dividend by checking for:
  1. Firstly is the company paying a notable dividend (greater than 0.5%) - if not then the rest of the checks are ignored.
  2. Current dividend yield, is there one at all, is it higher than the low risk savings rate, and is it above the top 25% of dividend payers? (2 checks)
  3. Have they paid a dividend for 10 years, and during this period has the dividend been volatile (drop of more than 25%)? (1 check)
  4. If they have paid a dividend for 10 years has it increased in this time? (1 check)
  5. How sustainable is the dividend, can NVIDIA afford to pay it from its earnings today and in 3 years (Payout ratio less than 90%)? (2 checks)
  6. NVIDIA has a total score of 0/6, see the detailed checks below.


Full details on the Dividends part of the Simply Wall St company analysis model.

Management

 What is the CEO of NVIDIA's salary, the management and board of directors tenure and is there insider trading?

Management is one of the most important areas of a company. We look at unreasonable CEO compensation, how long the team and board of directors have been around for and insider trading.
CEO
Jensen  Huang, image provided by Google.
Jensen Huang
COMPENSATION $12,194,238
AGE 54
TENURE AS CEO 24.6 years
CEO Bio

Mr. Jensen Hsun Huang founded NVIDIA Ltd. in 1993 and has been its Chief Executive Officer and President since 1993. Mr. Huang co-founded NVIDIA Corporation in April 1993 and has been its Chief Executive Officer and President since April 1993. Mr. Huang served as an Advisor at IT-Farm Corporation. Under his leadership, NVIDIA has become the world leader in programmable graphics processing technologies and one of the semiconductor industry's largest fabless companies. Mr. Huang served as a Trustee of The RAND Corporation since 1999. From 1985 to 1993, he was employed at LSI Logic Corporation where he held a variety of positions. From 1984 to 1985, Mr. Huang served as a Microprocessor Designer for Advanced Micro Devices, Inc. He has been a Director of NVIDIA Corporation and NVIDIA Ltd. since April 1993. He served as Director of The RAND Corporation and Coreware. He serves as a Director of Semiconductor Industry Association. He is also a Member of the Committee of 100. In 2004, the Fabless Semiconductor Association honored him with the prestigious Mr. Morris Chang Exemplary Leadership Award. Mr. Huang is often invited to speak on technology and business trends at industry events. He holds an M.S. in Electrical Engineering degree from Stanford University and a B.S. in Electrical Engineering degree from Oregon State University.

CEO Compensation
  • Jensen 's compensation has increased by more than 20% in the past year.
  • Jensen 's compensation appears reasonable.
Management Team Tenure

Average tenure and age of the NVIDIA management team in years:

10.7
Average Tenure
55.4
Average Age
  • The average tenure for the NVIDIA management team is over 5 years, this suggests they are a seasoned and experienced team.
Management Team

Jensen Huang

TITLE
Co-Founder
COMPENSATION
$12M
AGE
54
TENURE
24.6 yrs

Colette Kress

TITLE
Executive VP & CFO
COMPENSATION
$5M
AGE
50
TENURE
4.2 yrs

Deborah Shoquist

TITLE
Executive Vice President of Operations
COMPENSATION
$3M
AGE
62
TENURE
8.8 yrs

Jay Puri

TITLE
Executive Vice President of Worldwide Field Operations
COMPENSATION
$5M
AGE
62
TENURE
8.8 yrs

Chris Malachowsky

TITLE
Co-Founder
COMPENSATION
$320K
TENURE
24.8 yrs

Michael Byron

TITLE
Chief Accounting Officer and Vice President of Finance
AGE
51
TENURE
6.7 yrs

Bill Dally

TITLE
Chief Scientist and Senior Vice President of Research
AGE
56
TENURE
8.8 yrs

Tim Teter

TITLE
Senior Vice President
AGE
50
TENURE
0.8 yrs

Bob Sherbin

TITLE
Vice President of Corporate Communications
AGE
58
TENURE
8.8 yrs

Jeff Herbst

TITLE
Vice President of Business Development
Board of Directors Tenure

Average tenure and age of the NVIDIA board of directors in years:

15.2
Average Tenure
63.1
Average Age
  • The average tenure for the NVIDIA board of directors is over 10 years, this suggests they are a seasoned and experienced board.
Board of Directors

Jensen Huang

TITLE
Co-Founder
COMPENSATION
$12M
AGE
54
TENURE
24.6 yrs

Bill Miller

TITLE
Lead Director
COMPENSATION
$343K
AGE
71
TENURE
8.5 yrs

Mark Perry

TITLE
Independent Director
COMPENSATION
$343K
AGE
61
TENURE
12.5 yrs

Rob Burgess

TITLE
Independent Director
COMPENSATION
$343K
AGE
59
TENURE
5.9 yrs

Mark Stevens

TITLE
Independent Director
COMPENSATION
$343K
AGE
57
TENURE
9.2 yrs

Jim Gaither

TITLE
Independent Director
COMPENSATION
$343K
AGE
79
TENURE
18.9 yrs

Harvey Jones

TITLE
Independent Director
COMPENSATION
$343K
AGE
64
TENURE
24 yrs

A. Seawell

TITLE
Independent Director
COMPENSATION
$343K
AGE
69
TENURE
19.9 yrs

Tench Coxe

TITLE
Independent Director
COMPENSATION
$343K
AGE
59
TENURE
24.4 yrs

Dawn Hudson

TITLE
Independent Director
COMPENSATION
$343K
AGE
58
TENURE
4.3 yrs
Recent Insider Trading
  • NVIDIA insiders have only sold shares in the past 3 months.
Who owns this company?
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Management checks
We assess NVIDIA's management by checking for:
  1. Is the CEO's compensation unreasonable compared to market cap and profit (greater than 0.5% of the company's profit + 0.03% of market cap)? (1 check)
  2. Has the CEO's compensation increased more than 20% whilst the EPS is down more then 20%? (1 check)
  3. Is the average tenure of the management team less than 2 years? (1 check)
  4. Is the average tenure of the board of directors team less than 3 years? (1 check)
  5. NVIDIA has a total score of 0/6, this is not included on the snowflake, see the detailed checks below.


Note: We use the top 6 management executives and board members in our calculations.

Note 2: Insider trading include any internal stakeholders and these transactions .

Full details on the Management part of the Simply Wall St company analysis model.

Company News

Company Info

Map
Description

NVIDIA Corporation operates as a visual computing company worldwide. It operates in two segments, GPU and Tegra Processor. The GPU segment offers processors, which include GeForce for PC gaming; GeForce NOW for cloud-based game-streaming service; Quadro for design professionals working in computer-aided design, video editing, special effects, and other creative applications; Tesla for deep learning, accelerated computing, and general purpose computing; and GRID for cloud-based visual computing users. The Tegra Processor segment provides processors that integrate a computer onto a single chip under the Tegra brand name; DRIVE automotive computers, which offer self-driving capabilities; and tablet and portable devices for mobile gaming and TV streaming under the SHIELD name. The company’s products are used in gaming, professional visualization, datacenter, and automotive markets. It sells its products primarily to original equipment manufacturers, original device manufacturers, system builders, motherboard manufacturers, add-in board manufacturers, and retailers/distributors. NVIDIA Corporation was founded in 1993 and is headquartered in Santa Clara, California.

Details
Name: NVIDIA Corporation
Ticker: NVDA
Exchange: NasdaqGS
Founded: 1993
Market Cap: $130,926,300,000
Shares outstanding: 606,000,000
Website: http://www.nvidia.com
Address: NVIDIA Corporation
2788 San Tomas Expressway,
Santa Clara,
California, 95051,
United States
Listings
Exchange Symbol Ticker Symbol Security Exchange Country Currency Listed on
NasdaqGS NVDA Common Stock Nasdaq Global Select US USD 22. Jan 1999
DB NVD Common Stock Deutsche Boerse AG DE EUR 22. Jan 1999
XTRA NVD Common Stock XETRA Trading Platform DE EUR 22. Jan 1999
SWX NVDA Common Stock SIX Swiss Exchange CH CHF 22. Jan 1999
WBAG NVDA Common Stock Wiener Boerse AG AT EUR 22. Jan 1999
BMV NVDA * Common Stock Bolsa Mexicana de Valores MX MXN 22. Jan 1999
Number of employees
Current staff
Staff numbers
10,299
NVIDIA employees.
Industry
Industry: Semiconductors
Sector: Semiconductors and Semiconductor Equipment