Investing

Nvidia Still Up 210% in the Past Year

Douglas A. McIntyre

Published: May 9, 2024 6:40 am

Nvidia Corp. (NASDAQ: NVDA), the leading artificial intelligence (AI) company in the world, had a brief sell-off recently. Some investors believe there has been a backlash against the value of AI companies. Among the reasons was that too many public and private companies had crowded the market. Others said AI applications would not become commercially viable enough as fast as had been forecast. Some said governments would start to regulate AI companies because of the dangerous influence on elections and the wider society.

However, Nvidia’s retreat obscures that its stock is up 210% in the past year. That is hardly a rejection of the AI movement.

Maybe some investors did not think Nvidia’s latest earnings were good enough. They were spectacular by any measure. Revenue rose 265% year over year to $22.1 billion. At its current pace, Nvidia will have revenue of $100 billion this year. Earnings increased an extraordinary 765% to $4.83 per share. (See how much money Nvidia makes every minute.)

Nvidia had a war chest of $26 billion in cash, cash equivalents, and securities at the end of the quarter. That is growing at a rate of over $10 billion a quarter. Nvidia’s cost to borrow money with its balance sheet and growth has to be among the lowest of any large company globally. Nvidia’s ability to do strategic M&A is considerable.

“You have massive buyers of chips coming in saying we were already buying a ton, we’re buying even more. The question for Nvidia is: is it enough?” Mike Bailey, director of research at Fulton Breakefield Broenniman, recently told Bloomberg. It is a good question. Based on a surge in AI chip sales, applications, and server capacity, investors should not worry.

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