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NVIDIA Corp (NVDA) Trade Card™

244.03 -11.44 (-4.48%)
Sector: Information Technology
Published by Capital Market Laboratories on 2020-04-04

What does this rating mean?
3Mo: +3.4%   |   6Mo: +34.1%  |   12Mo: +29.6%

10DMA: $221.3  |  50DMA: $254.3  |  200DMA: $207.9
What does this rating mean?


➜ NVDA generates $1.3526 in revenue for every $1 in expense, which is quite high and above the sector average of $0.99.

If there's one company that will be the technology's future disruptor, it may be Nvidia. It is a transformational company that now has its hands in the most innovative segments of technology and is one of the few identifiable crown jewels of tomorrow's world. And while we're at it, the stock is up 55% in the last three-months and 110% in the last two-years.

The company released earnings on 11-5-2015 and it was a blow out quarter. Let's touch on the results and then dig deeper into the fantastical possibilities of this technology marvel. Here's the video recap of this article, with fleshed out details below in the write-up.

Earnings Results
Revenue: $1.31 billion, fully $130 million higher than expectations. For now, gaming is still the 'big stick' for NVDA, representing 58% of revenue and growing at an absurd 44% year-over-year and an 82% market share (Source:

EPS: $0.46 versus an expected $0.25.

Forecasts: $1.3 billion for Q4 versus estimates of $1.2 billion.

Nvidia the Marvel
Here's a chart of NVDA's revenue in the blue bars and levered free cash flow in the orange line -- but this is not yet updated for the most recent earnings report. Note that revenue in the last year is at an all-time high.

The marvel behind NVIDIA stands squarely on the footing of its strategy to become the driving force underlying large technology segments and to power those segments with every major company. This edge allows the firm to benefit from segment growth, rather than to make a bet on any specific provider. With new product development and continued innovation, NVDA is a true technology disruptor.

The gaming revenue blow out and growth is even more impressive noting that PC shipments are shrinking by ~11% year-over-year and competitors like AMD saw sales declines while NVDA is seeing sales explode.

NVDA holds the dominant position in the GPU (graphic processor) market which means it controls the very guts of the gaming segment which is expected to reach $118 billion in two years. Nvidia's chips are graphics processing units used to display animated scenes in game software and so the firm has easily weathered the PC slowdown.

Self Driving Cars
The company is also truly the 'secret weapon' in self-driving car algorithms and has already engaged Tesla, Aston Martin, Rolls Royce and Audi with what can only be described as 'the guts of the future' and revenue in the automotive space grew over 50% year-over-year. While the number still sits small at $79 million, let's take a look at why that number could grow 40-fold in the next few years.

In fact, Ian Ing of MKM partners wrote:

"[M]achine learning could become a $3B+ opportunity should it grow to 30%-40% of the $10B server chip market."
(Source: Barron's).

The company's strategy in this segment is to become a part of the internal workings that all manufacturers depend on. Barron's notes that the firm provides processors to more than 50 automakers working toward driver-less cars.

NVIDIA announced that its Tesla Accelerated Computing Platform secured a deal with long-time partner Microsoft (and its Cloud) and NVIDIA processors already power the dashboard and infotainment systems included in Audi vehicles. NVIDIA could very well end up being the hyper critical system behind all self-driving cars. Check this out:

"The development kits are being used to help train self-driving prototypes[]. The kit contains a graphics processor that runs image-recognition software and decodes patterns in footage from up to 12 cameras."

The truly unique product offering NVDA provides (called PX) is that "instead of using lasers, radars, and ultrasound to detect obstacles, there’s a neural network at the base of its technology. The best part about this deep-learning system is that it’s fully automated" (Source: Market Realist).

"Because Drive PX relies on deep learning, it can learn to detect images it's never seen before. This is necessary for self-driving, in which quick responses or evasive action is required. The feature that makes Nvidia's Drive PX so appealing is its ability to handle input from twelve cameras, and use it to get a comprehensive view of the vehicle's surroundings.

NVIDIA claims that the kit can infer things, such as the differences between various vehicles, like a taxi cab, an ambulance, and a police car. It can build a 3D map of objects around the car that enables it to self-park."
(Source: Market Realist).

Smart TV: The War Begins: NVIDIA and Apple
NVIDIA has spent the last couple of years positioning itself as a full fledged player in the console field, releasing the Shield Portable, Shield Tablet and now the Shield set-top box. (Source: Nvidia Shield is the set-top box that makes Apple TV look like a kid's toy).

Here's where it gets interesting. NVDA's Matt Wuebbling (general manager for Shield) addressed the Apple TV and said "[w]e think this validates the category of the smart TV console that we pioneered." Of course, when AAPL enters a category, it grows massively larger -- we've seen that with the iPod, iPhone and iPad. But it gets better. NVDA is claiming rather loudly that its product is substantially better than Apple's. Here are some specs:

"SHIELD offers 3x more performance, plus more features and more ways to game. It’s still the only smart TV console that can stream 4K content. And — thanks to its support for Chromecast — it connects your mobile devices directly to your living room display."

NVIDIA goes on to write that Shield is "the best choice for gamers, the only choice for 4K and the logical choice for Chromecast." We note that Apple TV as of yet, does not support 4K resolution. Nvidia expanded by writing that "By 2018, consumers will own more than 100 million ultra-high definition 4K TVs. And SHIELD remains the only media streamer that supports 4K content. There's plenty of content already available — from both Netflix (NFLX) and YouTube — and plenty more coming.

NVIDIA stands squarely in the middle of gaming industry, connected and self-driving cars, mobile devices and Smart TV with a shrewd strategy that allows for market dominance. The company's recent past maybe only be the beginning of a remarkably bright future. If you're looking for a potential crown jewel of tomorrow's technology, Nvidia may be the place to start.

In an interesting twist, NVDA's revenue (TTM) of $10.92 billion is actually down from a year ago ($11.72 billion). Taking a less myopic view, revenue (TTM) is up from two-years ago ($9.71 billion).

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Technicals   |   Support: 196.4   |   Resistance: 261.08   

Swing Death Cross Alert: The short-term 10 day MA is now below the 50 day MA.

NVDA's -4.48% drop today has a material impact on its technical outlook.

NVDA has a three bull (stock is range bound) technical rating because its trading above its 10- and 200-day moving averages, but below its 50- day moving average. We also note that the 10-day MA is below the 50-day MA ("swing death cross").

Earnings Estimates
Earnings Date
Revenue (Mean)
Revenue (Median)
Last Quarter (Actual)
$3.11 billion

Fundamentals Rating Summary

Metric Current 1yr Ago 2yr Ago Direction
Revenue (TTM US$ Millions)Falling 10,918 11,716 9,714 Falling

Operating Margin (QTR)Falling 1.35 1.48 1.49 Falling

Net Income (TTM US$ Millions)Falling 2,796 4,141 3,047 Falling

Cash from Operations (TTM US$ Millions)Rising 4,761 3,743 3,502 Rising

Research and Development Expense/RevenueFalling 0.238 0.293 0.174 Falling

Stock Returns and Chart

NVDA is up +3.4% over the last three months and up +34.1% over the last six months. The stock price is up +29.6% over the last year.

Before we dig into the fundamental trends that drive the rating, let's look at a two-year stock chart with regression channel and 10-day momentum (on the bottom).

Note: You can change time horizons by clicking the or buttons near the bottom of the chart. You can examine a one minute day trading chart by clicking the at the top left corner of the chart.

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Now let's examine the visualizations of the critical financial measures.

Enter Symbol

Revenue (TTM US$ Millions) 10,91811,7169,714Falling

Revenue over the trailing twelve months (TTM) for NVDA is falling. For the most recent (annual) period the company reported $10.92 billion from $11.72 billion a year ago, or a -6.8% change. Two years ago revenue (TTM) was $9.71 billion which is a change of $1.20 billion a (12.4% move).

What do all these numbers mean?
NVDA's fundamental rating was affected from these results:
1. The one-year change was negative (lowers the rating).
2. The two-year change was positive (raises the rating).

Let's look at Revenue (TTM US$ Millions) in the chart below.

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Enter Symbol

Operating Revenues/Operating Expense 1.351.481.49Falling

Operating Revenues/Operating Expense
This ratio (which simply represents how much revenue is generated per one dollar of expense) must be at a minimum above 1.0 in order for a company to turn an operating profit. For the latest quarter NVDA showed a ratio of 1.35.

What do all these numbers mean?
A year ago Operating Revenues/Operating Expense was 1.48. In the last year we can see operating margins are decreasing but are greater than 1.0 for the most recent period.

NVDA's fundamental rating was affected from the operating margin numbers in two ways:
1. The current value is above 1.0 (the firm generates an operating profit).
2. The one-year change was negative (lowers the rating a little bit).

Let's look at Operating Revenues/Operating Expense in the chart below with the total assets in the orange line.

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Net Income (TTM US$ Millions) 2,7964,1413,047Falling

Net Income (after tax profit) over the trailing twelve months (TTM) for NVDA is falling. For the most recent trailing-twelve-months (TTM) the company reported net income of $2,796 (million). That's a decrease in the most recent year from $4,141 (million) or a -32.48% change and a decrease from two-years ago of -8.24%.

In our next chart we plot Net Income (TTM US$ Millions) in the blue bars and the quarterly results in the gold line. Note the falling bars from a year ago (four quarters ago).

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Cash from Operations (TTM US$ Millions) 4,7613,7433,502Rising

Cash from Operations (TTM US$ Millions) is a critical determinant of stock price since market cap is the present value of all future free cash flows. For NVDA the metric is falling (it was $3,743 million last year). For the most recent trailing-twelve-months the company reported Cash from Operations (TTM US$ Millions) of $4,761 million. That's a rise in the most recent year from $3,743 million (a 27.20% increase.)

This measure of cash is up $1,259 million from 3,502 two-years ago.

For our next chart we plot Cash from Operations (TTM US$ Millions) in the blue bars through time. Note the falling bars from a year ago (four quarters ago).

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