What’s Behind Nvidia Stock’s 5x Rise Since Late 2018?

May 23rd, 2022 by Trefis Team
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Nvidia Corporation (NASDAQ: NVDA) stock price rose 5x from $33 in 2018 end to around $167 currently, primarily due to favorable changes in its sales and P/S multiple. During this period, the company witnessed a strong 130% rise in revenues, and combined with a more than 80% rise in its P/S multiple, the company’s stock price has rallied despite a marginal rise in the outstanding share count. Further, over the same period, the S&P 500 returned around 60%, meaning that NVDA stock has managed to strongly beat the index since 2018-end.

In our interactive dashboard, Why Nvidia Stock Moved: NVDA Stock Has Gained 400% Since 2018, we break down the factors behind this move.

(A) NVDA’s Total Revenue has grown 130% from $11.7 billion in FY 2019 to $26.9 billion in FY 2022

  • NVDA’s total revenue initially dropped from $11.7 billion in FY ’19 to $10.9 billion in FY ’20, but demand has picked up since the pandemic and sales have risen strongly to $26.9 billion in FY ’22, and currently stand at the same level (NVDA’s fiscal year ends in January).
  • Nvidia is a major player in the GPU market, with its sales being driven by gaming processors and data centers.
  • Nvidia’s largest segment is the graphics segment, bringing in $15.9 billion as of FY ’22, making up around 59% of the company’s total sales.
  • For additional details about NVDA’s revenues and comparison to peers, see Nvidia (NVDA) Revenue Comparison
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(B) Revenue per share (RPS) increased 124% from $4.81 in FY 2019 to $10.75 currently

  • NVDA’s revenue rose from $11.7 billion in FY 2019 to $26.9 billion currently, while the outstanding share count rose from 2.4 billion in FY 2019 to around 2.5 billion currently.
  • Due to this, RPS has jumped more than 2x from $4.81 in FY ’19 to $10.75 currently.

(C) Price-To-Sales (P/S) multiple for NVDA rose strongly from 14.8x in 2019 to 52.1x by 2021 end, but has pulled back to 15.5x currently, still slightly higher than its 2019 level

  • NVDA’s P/S multiple rose strongly to around 52.1x by late 2021, on the back of rising investor expectations surrounding increased demand for its graphic processors, leading to a rise in the company’s sales.
  • However, due to the current geopolitical tensions and increased economic uncertainty weighing on the broader markets, the P/S multiple has pulled back, currently standing at around 15.5x.
  • For additional details about the company stock returns and comparison to peers, see Nvidia (NVDA) Stock Return Comparison.

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Returns May 2022
MTD [1]		 2022
YTD [1]		 2017-22
Total [2]
 NVDA Return -10% -43% 529%
 S&P 500 Return -4% -17% 78%
 Trefis Multi-Strategy Portfolio -5% -21% 211%

[1] Month-to-date and year-to-date as of 5/23/2022
[2] Cumulative total returns since the end of 2016

 

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