NVIDIA (NVDA) Fiscal Year 2024 Annual Earnings Report Analysis

Key Metrics (Historical Comparisons)

Executive Summary

NVIDIA delivered an exceptional fiscal year 2024 with revenue surging to nearly $61 billion, representing a more than doubling compared to FY 2023. This robust growth was driven by explosive demand in data center AI, gaming, and automotive segments. The company’s gross profit soared, reflecting improved product mix and pricing power, while net income and EPS demonstrated extraordinary increases, underscoring operational leverage and scale benefits. Notably, despite a slight decrease in shares outstanding, EPS experienced dramatic expansion, highlighting strong profitability and shareholder value creation.

Management Discussion and Analysis (MD&A)

During FY 2024, NVIDIA capitalized on the accelerated adoption of AI and high-performance computing, which significantly contributed to record-breaking revenue. The Data Center segment alone generated $47.5 billion, accounting for approximately 78% of total revenue, driven by demand for GPU accelerators in cloud and enterprise AI applications. Gaming revenue remained resilient at $10.4 billion, supported by new product launches and ongoing demand for GeForce GPUs. Automotive and OEM segments also contributed modest but growing revenues, reflecting NVIDIA’s expanding presence in autonomous vehicle and embedded markets.

Gross margins improved substantially due to favorable product mix and pricing strategies, with gross profit margin increasing from approximately 57% in FY 2023 to around 73% in FY 2024. Operating expenses increased mainly from higher R&D investments and stock-based compensation, which totaled over $3.5 billion for FY 2024. The company also recognized a significant gain from the sale of marketable securities, bolstering net income.

Management expects continued strong growth driven by AI, metaverse, and data center infrastructure investments. However, geopolitical risks, supply chain constraints, and competitive pressures are acknowledged as potential headwinds that could impact future performance.

Income Statement Analysis

Revenue reached $60.9 billion, a remarkable increase of 126% YoY, primarily fueled by AI-driven data center sales. Gross profit soared to $44.3 billion, with gross margins expanding significantly, illustrating higher-margin product mix and pricing power. Operating income surged to nearly $33 billion, reflecting operational leverage. Net income stood at $29.8 billion, translating into EPS of $11.93, a substantial increase from $1.74 in FY 2023. The quarter-over-quarter growth remains strong, though slightly moderated in the last quarter due to seasonal and supply chain factors.

Balance Sheet Analysis

As of FY 2024, NVIDIA’s total assets reached $65.7 billion, with cash and cash equivalents totaling $7.3 billion and marketable securities at $18.7 billion, indicating robust liquidity. Accounts receivable increased to $10 billion, reflecting higher sales volume, while inventories slightly rose to $5.3 billion, mostly due to supply chain adjustments. Total liabilities are $22.8 billion, with long-term debt at $8.5 billion, which is manageable relative to cash holdings. Shareholders’ equity has more than doubled to $42.98 billion, driven by retained earnings and accumulated comprehensive income.

The company maintains a solid liquidity position, with a current ratio exceeding 4:1, and leverage ratios remain conservative, supporting financial flexibility for future investments and shareholder returns.

Cash Flow Analysis

Operating cash flows soared to $28.1 billion, primarily from net income adjustments, including stock-based compensation and working capital improvements. Investing activities saw net cash outflows of approximately $10.6 billion, mainly due to acquisitions and increased capital expenditures, offset by maturities and sales of securities. The company repurchased $9.7 billion of shares and paid dividends of $395 million, reflecting confidence in long-term value creation. Financing activities included debt repayments and new debt issuance, keeping leverage at prudent levels.

Positive free cash flow and strong cash reserves position NVIDIA favorably for strategic acquisitions, R&D, and shareholder returns.

Ratios & DuPont Analysis

• Net Profit Margin: approximately 48.8%, indicating high profitability largely due to high-margin data center products.
• Return on Assets (ROA): approximately 45.3%, reflecting efficient asset utilization.
• Return on Equity (ROE): approximately 69.3%, driven by high net income and effective use of shareholder equity.
• Asset Turnover: around 0.93, signifying efficient revenue generation relative to total assets.
• Equity Multiplier: approximately 1.53, indicating moderate leverage.

The DuPont analysis underscores NVIDIA’s exceptional profitability and efficient asset and equity utilization, supported by high-margin products and scale advantages.

Risk Factors

• Regulatory Risks: Potential scrutiny related to international trade, export controls, and antitrust proceedings, especially in China and the US.
• Market Risks: Rapid technological changes and intense competition from AMD, Intel, and emerging players threaten market share and margins.
• Operational Risks: Supply chain disruptions, component shortages, and geopolitical tensions could impact product availability and costs.
• Financial Risks: High dependence on a few key segments exposes vulnerability to cyclical downturns and macroeconomic shifts.
• Macro Risks: Global economic slowdown, inflation, and currency fluctuations could influence revenue and profit margins.

Notes & Additional Commentary

NVIDIA’s FY 2024 results include one-time gains from securities sales and strategic investments, boosting net income. Stock-based compensation remains high but aligns with industry standards for competitive talent acquisition. The companyu2019s aggressive R&D investments are expected to sustain technological leadership but may pressure margins in the near term. Supply chain adjustments and geopolitical tensions are noted as potential headwinds, but NVIDIA’s strong liquidity and market position provide resilience.

Investment Implications

Short-term opportunities include capitalizing on AI-driven data center growth, new product launches, and expanding markets in automotive and metaverse applications. Long-term risks involve increased competition, regulatory headwinds, and geopolitical uncertainties. NVIDIAu2019s robust financial health, innovative capacity, and strategic positioning support a positive long-term outlook, making it attractive for growth-oriented investors willing to accept near-term volatility.