Major Tech Company Continues Its Run Of Massive Growth
Last week was busy with earnings and more tensions in the Middle East.
One company’s earnings are always a major news item.
And I wanted to make sure you didn’t miss it.
Nvidia (ticker: NVDA), the largest publicly traded company in the world, released earnings after the close on Wednesday.
We’ll talk about earnings in a minute.
Nvidia is worth almost $5.5 trillion!
It didn’t seem too long ago when Apple (ticker: AAPL) was the first company to cross $1 trillion (it was 2018).
For a long time, Nvidia was most known for its semiconductor chips used in gaming.
Recently, the fast development of artificial intelligence (AI) has moved more of Nvidia’s revenue share to data centers.
AI needs a lot of computer processing power, and Nvidia chips are some of the best around.
The chart above is from a year ago, and the growth has continued.
In Nvidia’s latest earnings release, revenue from its data center business rose to $75 billion, which is more than 90% higher than the value shown in the chart.
Revenue for the entire company was just over $80 billion, so Nvidia still makes the majority of its money from data centers.
And next quarter, Nvidia expects revenue to cross $90 billion, which is much higher than analysts were expecting.
Nvidia’s incredible growth in revenue has led to incredible stock price gains.
Since the start of 2019, Nvidia’s stock price is up almost 6,000%!
Can Nvidia keep it up?
It really comes down to the future of AI.
Over 90% of Nvidia’s revenue is from data centers, so if AI continues to grow, Nvidia will rise with it.
And market experts are very optimistic about AI and Nvidia.
Analysts expect Nvidia’s earnings to quadruple by 2031.
For fast-growing companies, I love using the PEG ratio, which divides the price-to-earnings ratio by expected earnings growth.
Among the Magnificent 7 stocks, which are the 7 largest tech companies, Nvidia has the lowest PEG ratio.
But there’s more to it than just the PEG ratio.
Nvidia is incredibly profitable.
Nvidia’s profit margin is over 60% for the past year, which is the highest among semiconductors and near an all-time high for the company.
Plus, Nvidia is giving a bunch of money back to shareholders.
Management announced it’s raising its dividend from $0.01 every quarter to $0.25.
And Nvidia is planning to buy back $80 billion worth of stock from shareholders.
Despite all of the wonderful news, Nvidia’s stock price was actually down a few points to end the week.
I’m not sure what more Nvidia could’ve done!
But if you’re into the AI hype, now is a great time to look into Nvidia before it’s too late.
What other AI stocks are you looking into right now?
Coach Parker
Category: Stocks
