February 16, 2024
Disclaimer: This article is for informational purposes only and should not be considered as financial advice. Investment decisions should be made based on your own research and risk assessment.
NVIDIA’s Remarkable Financial Surge: A 2024 Outlook
NVIDIA (NVDA) is a leading semiconductor company that has been building its legacy for the past two decades. Over the last 20 years, its stock has returned an eye-catching 25,514%. In this article, we will discuss the company’s outlook for 2024.
Company Snapshot
NVIDIA is popular for its innovative graphics processing units (GPUs) that power everything from gaming, automotive, and healthcare to AI. The company has been building its legacy for the past two decades and has established itself as a leader in the semiconductor industry.
Financial Performance
In fiscal year 2024, NVIDIA achieved remarkable financial results with a record-breaking revenue of $18.12 billion, exhibiting a staggering 206% increase compared to the previous year. This exceptional performance can be attributed to the company’s high-performing chips, which have been instrumental in driving its success throughout the fiscal year.
The Data Center segment experienced an astounding year-over-year growth of 279%, while the Gaming segment witnessed a substantial 81% growth. These two segments significantly contributed to the overall increase in revenue.
Looking ahead to the fourth quarter of fiscal year 2024, NVIDIA expects its revenue to reach approximately $20.00 billion, with a margin of error of plus or minus 2%. Furthermore, industry analysts have predicted an impressive revenue growth of 118% to reach $58.7 billion for the full fiscal year 2024. Additionally, they anticipate extraordinary growth in earnings per share (EPS) of 268.3% to reach $12.30 for the same period.
This revision ensures that the figures align logically, particularly regarding the projected annual revenue and growth rates.
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Investment Opportunity
Over the past two decades, NVIDIA has delivered an astonishing return of 25,514% to its stockholders, making it an incredibly lucrative investment.
The previous year proved to be a transformative period for the company as its shares experienced a remarkable surge of 238%. This substantial growth easily outpaced the gains of the tech-heavy NASDAQ Composite index, which recorded a 43% increase.
While the overall rise in tech stocks was largely influenced by the advancements in artificial intelligence (AI), NVIDIA’s exceptional performance can be attributed to its impressive quarterly results in fiscal year 2024, which surpassed market expectations.
Market analysts on Wall Street are optimistic about NVIDIA’s future growth prospects in the coming quarters. This positive sentiment could potentially drive the company’s stock even higher, potentially reaching the target price of $1,100, which is the highest price projection on the Street.
According to estimates compiled by FactSet, the average one-year price target for stocks within the Magnificent Seven (a term used to refer to a group of top-performing technology stocks) is approximately 11% higher than the closing price on Friday.
Notably, NVIDIA stands out with the highest expected share-price return, projected at about 34%. This is particularly impressive considering that the company already achieved a phenomenal gain of 239% and secured a prominent position on the S&P 500 leaderboard in the previous year.
Risk and Considerations
Despite the positive performance in the previous year, ongoing concerns surrounding the U.S.-China trade relations pose a significant challenge for NVIDIA to maintain its position as a dominant player in the semiconductor industry.
In October 2023, the U.S. Commerce Department implemented restrictions on the export of advanced computer chips to China. This development is noteworthy because approximately 20% to 25% of NVIDIA’s Data Center revenue originates from China and other countries affected by the new export limitations.
Consequently, NVIDIA expects a slight decline in revenue for the fourth quarter, although this may be partially offset by growth in other areas of the business. Taking into account these obstacles, the estimated revenue for the fourth quarter is projected to be approximately $20 billion, with a margin of error of plus or minus 2%.
This aligns with the predictions made by analysts, who anticipate a revenue figure of $20.03 billion for the same period.
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