EPS of $0.25 increased by 861.5% from previous year
Gross margin of 70.1%
Net income of 6.19B
""The world’s $1 trillion of data centers is transitioning to accelerated computing and generative AI, which offers the most cost-effective solutions for growth."" - Jensen Huang
NVIDIA Corporation (NVDA) Q2 2024 Results Analysis: Unprecedented Growth Driven by AI Demand
Executive Summary
In Q2 2024, NVIDIA Corporation (NVDA) delivered record revenue of $13.51 billion, marking a remarkable year-over-year increase of 101% and a quarter-over-quarter surge of 88%. This extraordinary performance is primarily fueled by the skyrocketing demand for AI-driven solutions, particularly in their Data Center segment, which reported revenue of $10.32 billion—up 171% year-over-year. Management reiterated that the transition to accelerated computing and generative AI is reshaping customer investments across industries, facilitating NVIDIA's strategic positioning as a cornerstone of this technological evolution. As NVIDIA expands production capabilities to meet demand, future revenue is anticipated to continue on this upward trajectory, translating into enhanced profitability and shareholder returns.
NVIDIA's Data Center revenue of $10.32 billion showcases its dominance in AI computing, up 171% from last year, driven by major cloud services firms. Gaming revenue grew to $2.49 billion, indicating solid demand recovery in the gaming market after a period of contraction.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
13.51B
101.48%
87.81%
Gross Profit
9.46B
224.60%
103.57%
Operating Income
6.80B
1 262.73%
217.76%
Net Income
6.19B
843.29%
202.89%
EPS
0.25
861.54%
201.20%
Key Financial Ratios
currentRatio
2.79
grossProfitMargin
70.1%
operatingProfitMargin
50.3%
netProfitMargin
45.8%
returnOnAssets
12.5%
returnOnEquity
22.5%
debtEquityRatio
0.4
operatingCashFlowPerShare
$0.26
freeCashFlowPerShare
$0.25
dividendPayoutRatio
1.62%
priceToBookRatio
42.02
priceEarningsRatio
46.69
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Key Insights from Management:
- Growth Outlook: Jensen Huang emphasized that the global transition to accelerated computing for AI workloads is a long-term industry shift, indicating strong demand visibility.
- Data Center Focus: Colette Kress highlighted that Data Center continued to outperform, with cloud service providers contributing over 50% to revenue, demonstrating NVIDIA's crucial role in AI infrastructure as customers increasingly pivot their capital expenditures towards advanced AI capabilities.
"The world’s $1 trillion of data centers is transitioning to accelerated computing and generative AI, which offers the most cost-effective solutions for growth."
— Jensen Huang
"We expect supply to increase each quarter through next year, reflecting our robust production ramp and partnerships with suppliers."
— Colette Kress
Forward Guidance
Management anticipates total revenue will reach approximately $16 billion in Q3 2024, bolstered largely by the Data Center segment. Q3 guidance reflects confidence in exponential growth, influenced by the compelling demand trajectory for AI and accelerated computing across customer landscapes. NVIDIA's gross margins are also expected to remain robust, projected at 71.5%.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
NVDA Focus
70.05%
50.30%
22.50%
46.69%
INTC
35.80%
-7.85%
1.47%
23.61%
TSM
52.40%
42.00%
5.70%
22.41%
MRVL
38.90%
-15.30%
-1.35%
-67.33%
MU
-32.70%
-62.40%
-4.92%
-6.62%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
With a remarkable Q2 report showing significant growth, strong management guidance, and an expanding addressable market driven by AI, NVIDIA presents a compelling investment opportunity. Investors should monitor ongoing growth initiatives within the Data Center segment, supply chain developments, and the competitive landscape as NVIDIA works to maintain its market leadership amidst rapidly evolving technology trends.
Key Investment Factors
Growth Potential
NVIDIA is a leader in AI and accelerated computing technology, presenting significant growth opportunities as the market evolves. The company’s collaborations, such as with Snowflake and VMware for enterprise AI applications, further underscore this potential.
Profitability Risk
Key risks include regulatory changes affecting GPU exports to China and increased competition as technological advancements arise globally. Supply chain constraints may also impact revenue growth if demand outpaces supply.
Financial Position
NVIDIA has maintained a solid balance sheet with total assets of $49.56 billion and total liabilities of $22.05 billion, showcasing a strong capital structure. With significant cash reserves and notable profitability, the company is well-positioned to navigate future challenges.
SWOT Analysis
Strengths
Leading position in AI computing and accelerated computing technology
Strong revenue growth fueled primarily by Data Center and COVID recovery
Dynamic partnerships with major cloud service providers enhancing growth
Established brand and reputation within the tech and semiconductor industry
Weaknesses
High dependency on the data center segment for revenue growth
Vulnerability to shifts in regulatory and geopolitical climates, particularly concerning China
Potential for increased competition from other tech companies entering the AI sector
Opportunities
Expansion of AI markets and growing customer demand for cloud-based AI solutions
Continued innovation and technological advancements within their product offerings
Increased investments in R&D to maintain and enhance market leadership
Threats
Emerging competitors and technology disruptors in AI and semiconductor markets
Economic downturns affecting customer spending in technology sectors
Regulatory changes that may restrict sales of products to key international markets