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NVIDIA's Q3 2024: Record Growth and Profits Amid AI Boom

$NVDA
Form 10-Q
Filed on: 2024-11-20
Source
NVIDIA's Q3 2024: Record Growth and Profits Amid AI Boom

Financial Analysis of NVIDIA Corporation's Q3 2024 SEC Filing

Snapshot of Key Information:

  • Filing Type: 10-Q (Quarterly Report)
  • Reporting Period: Q3 FY2024 (ending October 27, 2024)
  • Total Revenue: $35.1 billion
  • Net Income: $19.3 billion
  • Operating Income: $22.1 billion
  • EBITDA: Estimated at $22.8 billion (preliminary calculation based on operating income and adjustments)
  • Cash and Marketable Securities: $37.7 billion
  • Deferred Revenue: $833 million (current)
  • Future Purchase Commitments: $42 billion

Comprehensive Analysis

NVIDIA Corporation's latest quarterly report reveals a robust financial performance, driven by strong demand across its key segments, particularly in Data Center and Compute. The company's revenue for Q3 FY2024 surged to approximately $35.1 billion, marking a substantial increase from $14.6 billion in the same quarter of the previous fiscal year. This impressive growth underscores NVIDIA's strategic positioning within the AI and data center markets, which continue to demonstrate explosive demand.

Revenue Breakdown

NVIDIA's revenue is diversified across several geographic markets and operational segments:

  • United States: $14.8 billion
  • Singapore: $7.7 billion
  • China (including Hong Kong): $5.4 billion
  • Data Center Segment: $30.8 billion
  • Compute Segment: $27.6 billion

The increase in revenue from the United States and significant contributions from Asia, particularly Singapore and China, reflect NVIDIA's global reach and the growing adoption of its technologies. The Data Center segment continues to be a powerhouse for revenue generation, indicating strong client demand for high-performance computing solutions.

Profitability Metrics

  • Net Income: $19.3 billion, with a net income margin of approximately 55%—a clear indicator of the company's operational efficiency and pricing power in a competitive market.
  • Operating Income: $22.1 billion, with an increase in operating income compared to $10.3 billion in Q3 FY2023, showcasing enhanced cost management and operational scalability amidst rising sales.
  • EBITDA: Estimated at $22.8 billion, taking into account the operating income and adding back depreciation and amortization, which indicates a solid cash flow generation capacity.

Growth Rate

The growth rate of 140% year-over-year in total revenue illustrates NVIDIA's successful navigation of the market landscape, capitalizing on trends related to AI and machine learning. This growth trajectory is further supported by the increasing importance of graphics processing units (GPUs) in various industries, including gaming, automotive, and professional visualization.

Cost of Revenue

The cost of revenue for Q3 FY2024 stood at $543 million, up from $473 million in Q3 FY2023. The increase in costs, while significant, has not outpaced revenue growth, resulting in enhanced profitability.

Deferred Revenue and Future Commitments

NVIDIA reported a deferred revenue balance of $833 million, indicating strong future revenue visibility. The company also disclosed future purchase commitments totaling $42.0 billion, reflecting substantial planned investments in supply chain and product development, which are essential for maintaining competitive advantages.

Stock-Based Compensation and Expenses

The report notes comprehensive expenses associated with stock-based compensation, totaling $3.4 billion in the latest period. While this represents a significant cost, it is a common practice among tech companies to incentivize talent and drive innovation.

Liquidity Position

With cash and marketable securities totaling $37.7 billion, NVIDIA maintains a strong liquidity position, allowing for flexibility in capital allocation and strategic investments. The company's robust cash reserves are crucial for funding future growth initiatives and mitigating any short-term financial challenges.

Conclusion and Recommendation

NVIDIA's Q3 FY2024 financial report showcases a company in a strong position, with impressive revenue growth, substantial profitability, and a solid liquidity foundation. Given the ongoing trends in AI and high-performance computing, the company's market leadership is poised to continue.

Recommendation: Buy. Investors should consider adding to their positions in NVIDIA, as the combination of strong fundamentals, growth prospects in AI and data centers, and a robust balance sheet make it an attractive investment opportunity in the tech sector.