Summary
- Nvidia is an industry leader in the GPU market for high-performance gaming and data centers.
- The company reported solid financial results for Q4 FY23 as it beat both revenue and earning growth rate estimates.
- Its newest H100 GPU offers up to 30 times better performance than prior models, for Artificial Intelligence workloads. Therefore, Nvidia stock is poised to become the “backbone” of the AI industry.
- Its gaming revenue has started to rebound sequentially but is still down year over year.
Nvidia (NASDAQ:NVDA) is the world leader in high-performance graphical processing units or GPUs, used in gaming PCs and data centers. In past posts on the company, I discussed its solid data center revenue growth, which was offset by a tepid gaming market in the third quarter. My thesis was simple, this was a “cyclical decline in gaming” which was poised to bounce back long term. Now, it looks as though my thesis is playing out as Nvidia beat both revenue and earnings growth estimates for the fourth quarter of FY23. This was driven by signs of a recovery in the gaming market and strong automotive revenue growth. In past posts, I have also stated that Nvidia is the “backbone of the Artificial Intelligence industry” and its chips are the building blocks for the world’s largest supercomputers. Since that post, the stock price has skyrocketed by over 36% and is up by over 90% from its share price low in October 2022. In this post, I’m going to break down Nvidia’s fourth-quarter results before revealing my valuation model and forecasts for the company, let’s dive in.
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