Nvidia has seen significant growth in its stock price, with double-digit gains in the S&P 500 and Nasdaq Composite leading to a market cap of $3.3 trillion, briefly surpassing Microsoft as the world’s most valuable company. While known for its semiconductor chips, Nvidia’s revenue comes from a variety of sources, with data center services being the most significant. This demand for GPUs and AI development has boosted Nvidia’s position in computing and networking services.
The company’s income statement for the first quarter of fiscal year 2025 shows that Nvidia generated $26 billion in total revenue. Its gross profit margin of 78.4% reflects strong profitability, driven by high demand for AI chips and the company’s pricing power. With a net income of $14.9 billion and ample cash reserves of $31.4 billion at the end of the quarter, Nvidia is well-positioned for further innovation and growth.
Despite its rapid rise in stock price, Nvidia remains a good buy, with earnings and profits per share outpacing the share price movement. The company’s P/E multiple of 73.9 is lower than a year ago, indicating a more attractive valuation. With a strong financial profile and dominant position in the AI chip market, Nvidia’s stock continues to be a favorable investment opportunity.
Disclosure: The author holds positions in Microsoft and Nvidia. The Motley Fool recommends Advanced Micro Devices, Microsoft, and Nvidia, and has positions in the mentioned companies.
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https://www.fool.com/investing/2024/06/25/nvidia-is-now-worth-more-than-3-trillion/