Pro Perspectives 2/21/24





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February 21, 2024

Nvidia reported after the close today.
The market was setting up/ hoping for a disappointing report, with the dream of buying the stock lower, for a second chance at the generative AI trade.  They didn't get it.
It was another blow-out number.   Nvidia guided $20 billion in revenue.  It came in at $22.1 billion.  So, they grew revenue 22% just since the prior quarter.  That's four billion dollars in revenue growth on the quarter!  It's 265% revenue growth on the year — for one of the biggest, most important companies in the world
We've now seen four full quarters of business from Nvidia since the ChatGPT launch back on November 30, 2022 — the "ChatGPT moment," as Jensen Huang (Nvidia Founder/CEO) called it.  
And they are now doing almost four times the quarterly revenue of a year ago (pre-ChatGPT launch).  And if we just look at the data center business, which is now 83% of the company's business (up from 60%), they are doing five times as much revenue, compared to a year ago — by supplying the tools that power generative AI to the world's data centers and internet companies.
So, for a market that was looking for a negative surprise, they clearly weren't listening to what Jensen Huang has been saying in his frequent public speaking engagements.  And they weren't listening to what Nvidia's customers were saying (e.g. Microsoft and Meta) in their recent earnings calls, about how aggressively they are spending on computing infrastructure.
We talked about valuation yesterday.  On Nvidia's guidance coming into today's report, NVDA shares were trading at 43 times the annual net income run rate.  With today's revenue beat, plus net income margin expansion, it's now 33 times