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Good morning,

It feels like we just had Super Bowl Sunday all over again with Nvidia ($NVDA) reporting earnings yesterday. All of X (formally Twitter) were on the edge of their seats waiting for the closing bell. In today’s newsletter, I’m going to break down the entire earnings and most importantly give a buy, sell, or hold rating! Let’s get into it - Also if you have a friend who owns NVDA or looking to make sure to share this article with them 🙂 

💡 What is Nvidia?

For those who aren’t living under a rock - Nvidia is a software company that designs graphics cards, high-performance computing API and SoCs (system on chip units), and artificially intelligent software/hardware for mobile, desktop, and supercomputing. Its current main competitors are Intel, TSM, AMD, Apple, Google. Nvidia chips are predominantly used in data centers/computers/tablets/etc. but have expanded into automobiles in the past decade.

Here’s a visualization below of Q4 (earnings that just came out)

📈 Growth Since IPO

Nvidia $NVDA has had an explosive past year and a half that is truly only comparable to the rocketship of Tesla's share price in 2020-2022.

As you can see below, in the past 2 years Nvidia went parabolic.

In the past 5 years alone the stock price is up over 1,600% and currently sits at $780 a share.

📍 Q4 Earnings:

RESULTS (🔥 emoji denotes absolutely brain-melting numbers):

• Revenue: $22.10B vs. $6.05B y/y, EST $20.41B 🔥

• Net Income: $10.4B vs. $1.41 y/y (up 640%) 🔥

• Data Center Revenue: $18.4B vs. $3.62B y/y, EST $17.21B 🔥

• Gaming Revenue: $2.9B, +58% y/y, EST $2.72B

• Professional Visualization Revenue: $463M vs. $226M y/y, EST $435.5M

• Automotive Revenue: $281M, -4.4% y/y, EST $272.1M ❖ ADJ gross margin 76.7% vs. 66.1% y/y, EST 75.4%

• R&D Expenses: $2.47B, +26% y/y, EST $2.43B

• ADJ Operating Expenses: $2.21B, +25% y/y, EST $2.23B

• ADJ Operating Income: $14.75B vs. $2.22B y/y, EST $13.14B 🔥

• Free Cash Flow: $11.22B vs. $1.74B y/y, EST $10.82B 🔥

It’s hard to even wrap your head around the fact that for the same quarter last year (Q4 2022) Nvidia did $6 Billion in revenue and in just a year they did $22 Billion for Q4 2023. A jump in revenue like this is quite historic.

👀 Guidance: On top of this report, they are projecting $24 billion ±2% which is a beat in guidance as well.

🚩 Bad News: CFO Colette Kress did warn that data center revenue out of China “fell significantly” in Q4 due to US licensing requirements. What does this mean? The US has put certain restrictions on what Nvidia chips can be sold to China mainly because they will be used for military applications. Even with the China drawdown data center revenue still crushed expectations.

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💡 Where is this growth coming from?

Look I know what your thinking - how the h*ll did a company just magically grow in tens of billions in revenue in a single year?

• The Artificial Intelligence revolution is upon us and ChatGPT along with countless other tech companies need GPUs from Nvidia to power the AI models - this AI revolution is a worldwide phenomenon and shows no sign of slowing down

• Nvidia reportedly controls 80-95% of the AI GPU market and shows no sign of giving up this lead to AMD or Intel

• PC shipments are on the rise and have gone up 0.3% in Q4 according to Gartner. More PC sales = More Nvidia GPU sales

🔒 Buy, Sell, or Hold?

The number one question I get is whether or not to buy, sell, or hold $NVDA. My answer is HOLD and there are multiple reasons why.

Full transparency: I bought $NVDA pre-split in 2021 and held it for years. I [rather extremely unfortunate] sold it for $270 a share post-split this past year for a large gain. Two days ago, prior to this earnings I bought around $7,000 worth at a $680 share price and plan on holding form here.

Why I’m holding:

• The Free Cash Flow (FCF) is through the roof compared to both Intel and AMD

• Revenue and Net Income show no signs of stopping

• AI and Semi-Conductor industry as a whole is still on the upswing

• PE ratio is high but not anything out of control

• No signs off giving up market share in GPU market

If I see any significant drop in $NVDA over the coming weeks I will be adding to my position. This is NOT financial advice! Thanks for reading!