Agenda
x Agenda
1. NVIDIA Situation Overview
2. Wall Street Prep
3. DCF
4. WACC, Mid-Year Convention
5. Price discussion
x The Bull Case
AI
Clear leader in the semiconductor space
x The Bear Case
Overvalued?
Other tech companies are building chips in-house (Google, Amazon)
x Notes and Reminders
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NVIDIA DCF
Ticker
Date
Year end
NVDA
9/21/2023
12/31/2023
x Assumptions
Switches
Revenue
EBIT
WACC
TGR
WACC
TGR
x Income Statement (12/31 CYE)
Revenue
% growth
Implied Share Price
Current Share Price
Implied Gain / (Loss)
2
2
3
2
9.00%
2.50%
$353.11
$410.17
(14%)
Conservative
Revenue '24-'25
Revenue 2028
EBIT '24-'25
80.0%
2.0%
90.0%
WACC
TGR
12.2%
2.0%
2014
4,646
--
2015
4,960
7%
2016
6,653
34%
2017
9,468
42%
2018
11,951
26%
2019
10,618
-11%
772
17%
916
18%
1,829
27%
3,095
33%
4,064
34%
2,614
25%
2014
223
5%
2015
201
4%
2016
195
3%
2017
201
2%
2018
240
2%
2019
351
3%
CapEx
% of sales
134
3%
91
2%
164
2%
471
5%
671
6%
508
5%
Change in NWC
% of sales
% of change in sales
181
4%
(10)
0%
-3%
638
10%
38%
(241)
-3%
-9%
845
7%
34%
(716)
-7%
54%
x DCF
Revenue
% growth
Conservative Case
Street Case
Optimistic Case
2014
4,646
--
2015
4,960
7%
2016
6,653
34%
2017
9,468
42%
2018
11,951
26%
2019
10,618
-11%
EBIT
% of sales
Conservative Case
Street Case
772
17%
916
18%
1,829
27%
3,095
33%
4,064
34%
2,614
25%
EBIT
% of sales
x Cash Flow Items (12/31 CYE)
D&A
% of sales
Optimistic Case
Taxes
% of EBIT
EBIAT
D&A
% of sales
223
5%
201
4%
195
3%
201
2%
240
2%
351
3%
CapEx
% of sales
134
3%
91
2%
164
2%
471
5%
671
6%
508
5%
Change in NWC
% of sales
181
4%
(10)
0%
638
10%
(241)
-3%
845
7%
(716)
-7%
Unlevered FCF
Present Value of FCF
Period
Discount Period
Terminal Value
Present Value of Terminal Value
Enterprise Value
(+) Cash
(-) Debt
Equity Value
Diluted Shares
x Implied Stock Price
Street / Base
Revenue 2028
5.0%
Taxes
WACC
TGR
10.0%
11.7%
2.5%
Optimistic
Revenue '24-'25
Revenue 2028
EBIT '24-'25
120.0%
8.0%
105.0%
WACC
TGR
9.0%
3.00%
2020
16,042
51%
2021
26,034
62%
2022
27,505
6%
2023E
51,795
88%
2024E
77,970
51%
2025E
93,532
20%
2026E
111,484
19%
2027E
139,956
26%
2028E
135,485
-3%
4,437
28%
9,570
37%
6,149
22%
28,182
54%
45,402
58%
54,401
58%
66,000
59%
83,947
60%
81,478
60%
2020
1,017
6%
2021
1,138
4%
2022
1,552
6%
2023E
2024E
2025E
2026E
2027E
2028E
1,082
7%
979
4%
1,754
6%
364
2%
7%
2,899
11%
29%
2020
16,042
51%
2021
26,034
62%
2022
27,505
6%
1
2023E
51,795
88%
88%
88%
88%
2
2024E
77,970
51%
40%
51%
61%
3
2025E
93,532
20%
16%
20%
24%
4
2026E
107,536
15%
11%
15%
19%
5
2027E
118,274
10%
7%
10%
13%
6
2028E
124,188
5%
2%
5%
8%
4,437
28%
9,570
37%
6,149
22%
28,182
54%
54%
54%
45,402
58%
52%
58%
54,401
58%
52%
58%
62,546
58%
52%
58%
68,792
58%
52%
58%
72,232
58%
52%
58%
54%
61%
61%
61%
61%
61%
1,013
4%
2,214
5%
3,349
6%
4,652
7%
5,998
9%
7,223
10%
27,169
43,189
51,052
57,894
62,794
65,009
1,017
6%
1,138
4%
1,552
6%
2,823
5%
4,250
5%
5,099
5%
5,862
5%
6,447
5%
6,770
5%
1,082
7%
979
4%
1,754
6%
2,915
6%
4,388
6%
5,264
6%
6,052
6%
6,657
6%
6,990
6%
364
2%
2,899
11%
---
1,150
2%
1,732
2%
2,077
2%
2,388
2%
2,627
2%
2,758
2%
25,927
25,618
41,319
38,640
48,808
41,875
55,315
43,539
59,958
43,297
62,030
41,095
0.28
0.14
1.28
0.78
2.28
1.78
3.28
2.78
4.28
3.78
5.28
4.78
978,170
648,036
882,100
16,023
9,705
888,418
2,516
$353.11
WACC
WACC = % of equity x cost of equity + % of debt x cost of debt x (1 - Tax Rate)
Cost of equity = Risk free rate + Beta x Market Risk Premium
x
WACC
Market Cap
% of Equity
Cost of Equity
Risk Free Rate
Beta
Market Risk Premium
Debt
% of Debt
Cost of Debt
Tax Rate
Total
x
WACC
1,043,000
99.1%
11.76%
4.50%
1.65
4.40%
9705
0.92%
2.20%
10.00%
1,052,705
11.67%
NVIDIA Corporation (NVDA)
$410.71
NVIDIA Corporation
NVDA 67066G104 2379504 NASDAQ
FactSet Fundamentals
Common stock
28 OCT '18 27 JAN '19
Revenue
9,511
11,716
Cost of revenue
Cost of revenue excluding cost of revenue related to stock option purchase
Cost of revenue related to stock option purchase
Gross profit
-3,547
-4,545
Total operating expenses
Research and development
Research and development excluding restructuring and other charges
Restructuring and other charges
Sales, general and administrative
Stock option purchase
Legal settlement
Acquisition termination cost
Income / loss from operations
Interest income
-
Per share
Basic
Income / loss before change in accounting principle
Cumulative effect of change in accounting principle
Diluted
Income / loss before change in accounting principle
Cumulative effect of change in accounting principle
Weighted average shares
Basic
Diluted
All figures in millions of U.S. Dollar except per share items.
5,964
7,171
-2,454
-1,729
-1,729
-3,367
-2,376
-2,376
-
0
-725
-
Other income / expense, net
Interest expense
Other income / expense, net excluding interest expense
Interest and other income / loss, net
Income / loss before income tax expense / benefit
Income tax expense / benefit
Income / loss before change in accounting principle
Cumulative effect of change in accounting principle, net of tax
Net income / loss
-
-991
-
3,510
94
3,804
136
-32
-44
-44
-58
12
62
3,572
3
14
92
3,896
245
3,575
-
4,141
-
3,575
4,141
5.88
6.81
-
5.71
-
6.63
-
608.0
626.0
608.0
625.0
Tax rate
0%
-6%
28 APR '19 28 JUL '19 27 OCT '19 26 JAN '20 26 APR '20 26 JUL '20 25 OCT '20 31 JAN '21
2,220
4,799
7,813
10,918
3,080
6,946
11,672
16,675
-924
-1,962
-3,060
-4,150
-1,076
-2,667
-4,432
-6,279
-
-
-
-
-
-
-
-
1,296
2,837
4,753
6,768
2,004
4,279
7,240
10,396
-938
-674
-1,908
-1,379
-2,897
-2,091
-3,922
-2,829
-1,028
-735
-2,652
-1,732
-4,215
-2,778
-5,864
-3,924
-
-264
-
-529
-
-806
-
-1,093
-
-293
-
-920
-
-1,437
-
-1,940
-
358
44
929
92
1,856
137
2,846
178
976
31
1,627
44
3,025
50
4,532
57
-13
-13
-26
-27
-39
-39
1
66
995
0
98
1,954
-26
-25
-1
124
2,970
5
981
-80
-78
-2
-36
-136
-131
-5
-86
-180
-184
0
31
389
5
-54
-52
-2
1,591
2,939
4,409
-48
-109
-174
-64
-52
-64
-77
394
-
947
-
1,845
-
2,796
-
917
-
1,539
-
4
-123
2,875
-
4,332
-
394
947
1,845
2,796
917
1,539
2,875
4,332
0.65
1.56
3.03
4.59
1.49
2.50
4.67
7.02
-
0.64
-
1.54
-
607.0
616.0
2.99
-
608.0
616.0
4.52
-
609.0
617.0
1.47
-
609.0
618.0
2.47
-
614.0
622.0
4.59
-
615.0
624.0
6.90
-
616.0
626.0
617.0
628.0
-1%
5%
6%
6%
7%
3%
2%
2%
02 MAY '21 01 AUG '21 31 OCT '21 30 JAN '22 01 MAY '22 31 JUL '22 30 OCT '22 29 JAN '23
5,661
12,168
19,271
26,914
8,288
14,992
20,923
26,974
-2,032
-4,324
-6,795
-9,439
-2,857
-6,646
-9,400
-11,618
-
-
-
-
-
-
-
-
3,629
7,844
12,476
17,475
5,431
8,346
11,523
15,356
-1,673
-1,153
-3,444
-2,398
-5,405
-3,802
-7,434
-5,268
-3,563
-1,618
-5,979
-3,443
-8,555
-5,387
-11,132
-7,339
-
-520
-
-1,046
-
-1,603
-
-2,166
-
-592
-
-1,183
-
-1,815
-
-2,440
-
-1,353
-1,353
-1,353
-1,353
1,956
6
4,400
13
7,071
20
10,041
29
1,868
18
2,367
64
2,968
152
4,224
267
82
-53
25
-113
-15
-175
-129
-236
135
88
2,044
138
38
4,438
160
5
7,076
107
-100
-81
-68
-13
-63
-151
-132
-19
-87
-227
-198
-29
-75
-310
-262
-48
-43
9,941
1,805
2,280
-132
-153
-327
-189
-187
-6
2,893
61
4,181
187
1,912
-
4,285
-
6,749
-
9,752
-
1,618
-
2,274
-
2,954
-
4,368
-
1,912
4,285
6,749
9,752
1,618
2,274
2,954
4,368
3.08
1.72
2.71
3.91
0.65
0.91
1.18
1.76
-
3.03
-
1.69
-
621.0
632.0
2.67
-
2,489.0
2,529.0
3.85
-
2,493.0
2,532.0
0.64
-
2,496.0
2,535.0
0.90
-
2,506.0
2,537.0
1.17
-
2,500.0
2,526.0
1.74
-
2,495.0
2,517.0
2,487.0
2,507.0
7%
3%
5%
2%
10%
0%
-2%
-4%
30 APR '23 30 JUL '23
7,192
20,699
-2,544
-6,589
-
-
4,648
14,110
-2,508
-1,875
-5,169
-3,916
-
-633
-
-1,253
-
0
2,140
150
0
8,941
338
-81
-66
-15
-89
-131
69
2,209
42
249
9,190
-166
-958
2,043
-
8,232
-
2,043
8,232
0.83
3.33
-
0.82
-
3.30
-
2,470.0
2,490.0
2,472.0
2,495.0
8%
11%
4%
NVIDIA Corporation (NVDA)
$410.74
NVIDIA Corporation
NVDA 67066G104 2379504 NASDAQ
Source: FactSet Fundamentals
Common stock
DEC '13 DEC '14 DEC '15 DEC '16
Income Statement
Sales
Gross Income
EBIT
EBITDA
Net Income
Balance Sheet
Cash & Short-Term Investments
Total Assets
Total Debt
Net Debt
Total Liabilities
Total Shareholders' Equity
Cash Flow
Net Operating Cash Flow
Capital Expenditures
Net Investing Cash Flow
Net Financing Cash Flow
Free Cash Flow
Supplemental
Stock Option Comp Exp (Net of Tax)
Operating Lease Commitments
Long Term Debt Maturities
All figures in millions of U.S. Dollar.
4,118
2,257
502
742
449
4,646
2,573
772
992
615
4,960
2,782
916
1,116
608
6,653
3,903
1,829
2,016
1,497
4,126
6,738
922
-3,204
2,327
4,411
4,496
7,096
1,396
-3,099
2,749
4,347
4,934
7,305
1,479
-3,455
2,837
4,468
6,756
9,765
2,881
-3,874
4,134
5,631
852
-249
-487
-74
603
892
-134
-988
-397
757
1,152
-91
-435
-626
1,061
1,602
-164
-740
407
1,438
81.7
282.6
1.9
93.5
245.5
0.0
118.3
262.1
942.0
146.0
150.3
534.7
DEC '17 DEC '18 DEC '19 DEC '20 DEC '21 DEC '22
9,468
5,656
3,095
3,292
2,892
11,951
7,369
4,064
4,316
4,326
10,618
6,499
2,614
2,986
2,667
16,042
10,015
4,437
5,474
4,163
26,034
16,860
9,570
10,736
9,238
27,505
15,745
6,149
7,654
4,898
6,845
10,771
2,008
-4,837
3,672
7,098
7,478
13,414
1,989
-5,490
4,027
9,386
10,521
16,813
2,611
-7,910
4,939
11,874
11,087
28,154
7,706
-3,381
11,781
16,373
20,571
43,002
11,687
-8,884
17,328
25,674
13,245
40,951
11,819
-1,426
19,100
21,850
3,290
-471
1,162
-2,673
2,818
3,896
-671
-4,118
-2,618
3,225
4,572
-508
6,209
-1,023
4,064
5,621
-1,082
-18,682
3,857
4,539
8,786
-979
-10,344
1,999
7,807
5,903
-1,754
6,847
-11,313
4,148
239.0
237.2
22.7
432.7
646.6
1.0
604.7
765.5
0.0
972.6
861.9
0.0
1,430.3
989.2
0.0
2,081.2
1,211.8
416.3
NVDA-US
Income Statement (M)
Sales
Cost of Sales
Gross Income
EBITDA
Operating Income
Pretax Income
Tax Expense
Net Income
CY '14 CY '15 CY '16 CY '17 CY '18 CY '19 CY '20 CY '21
Dec '14 Dec '15 Dec '16 Dec '17 Dec '18 Dec '19 Dec '20 Dec '21
4,635
4,982
6,750
9,474 11,546 10,986 16,190 26,041
2,772
3,801
4,433
4,129
5,590
8,671
2,571
2,825
3,983
5,694
7,115
6,856 10,599 16,918
964
1,110
2,072
3,318
4,546
4,161
7,579 13,356
737
1,094
2,128
3,498
4,340
3,793
6,545 12,189
925
1,127
2,141
3,503
4,415
3,913
6,445 11,998
120
207
369
524
363
286
395
1,164
614
615
1,577
2,929
4,048
2,910
4,203
9,291
CY '22 CY '23E CY '24E CY '25E CY '26E CY '27E CY '28E
Dec '22 Dec '23E Dec '24E Dec '25E Dec '26E Dec '27E Dec '28E
26,969
51,795
77,970
93,532 111,484 139,956 135,485
10,834
15,403
21,618
25,212
31,549
42,560
35,258
16,093
36,472
56,014
65,797
81,773 102,365 100,671
10,863
28,573
45,645
55,243 9,350
28,182
45,402
54,401
66,000
83,947
81,478
9,339
28,339
46,222
55,874
58,610
79,021
81,570
727
3,765
6,324
7,022
9,114
11,739
11,848
4,825
22,418
37,474
43,799
54,043
73,510 -
NVIDIA Corporation (NVDA)
$414.26
NVIDIA Corporation
NVDA 67066G104 2379504 NASDAQ
FactSet Fundamentals
Common stock
Net cash provided by / used in operating activities
Net income / loss
Adjustments to reconcile net income / loss to net cash provided by / used in operating activities
Stock-based compensation expense
Depreciation and amortization
Stock-based compensation expense related to stock option purchase
Total other
Payments under patent licensing arrangement
Restructuring and other charges
Amortization of debt discount
Gains / losses on investments in non affiliates, net
Other
Bad debt expense / benefit
Gross tax benefit from stock-based compensation
Net loss on retirements of property and equipment
Non-cash realized gain on investment exchange
Deferred income taxes
Loss on early debt conversions
Impairment charge on investments
Gain on sale of long-lived assets and investments
Cumulative effect of change in accounting principle
In-process research and development expenses
Tax benefits / deficit from stock-based compensation
Changes in operating assets and liabilities
Accounts receivable
Inventories
Total prepaid expenses and other assets
Prepaid expenses and other current assets
Deposits and other assets
Accounts payable
Accrued liabilities and other long-term liabilities
Accrued and other current liabilities
Other long-term liabilities
Net cash provided by / used in investing activities
Proceeds from sales and maturities of marketable securities
Proceeds from maturities of marketable securities
Proceeds from sales of marketable securities
Acquisition of businesses, net of cash and cash equivalents
Purchases of marketable securities
Purchases of property and equipment and intangible assets
Investment in non-affiliates
Acquisitions, net of cash acquired
Investments and other, net
Reimbursement of headquarters building development costs from banks
Other
Proceeds from sale of long-lived assets and investments
Net cash used in / provided by financing activities
Payments related to stock option purchase
Proceeds from issuance of convertible notes, net
Purchase of convertible note hedges
Proceeds from the sale of common stock warrants
Proceeds from issuance of common stock under employee stock plans
Proceeds related to employee stock plans
Payments related to repurchases of common stock
Payments related to tax on restricted stock units
Payment of notes payable assumed from acquisition
Dividends paid
Principal payments on property and equipment
Proceeds from issuance of debt
Repayment of convertible debt
Payments related to repurchases of common stock
Other
Payments for debt issuance costs
Tax benefit from stock-based compensation
Other excluding tax benefit from stock-based compensation and payments for debt issuance costs
Payments under capital lease obligations
Others excluding payments under capital lease obligations
Change in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
Reconciliation of cash, cash equivalents, and restricted cash to the condensed consolidated balance sheet:
Total cash, cash equivalents, and restricted cash
Cash and cash equivalents
Restricted cash, included in prepaid expenses and other current assets
Supplemental disclosure
Cash received / paid for income taxes, net
Cash paid for interest
Non-cash investing and financing activity
Change in unrealized gains / losses from marketable securities
Assets acquired by assuming related liabilities
Goodwill adjustment related to previously acquired business
Deferred stock-based compensation
Acquisition of business - stock option conversion
All figures in millions of U.S. Dollar.
26 JAN '14 25 JAN '15 31 JAN '16 29 JAN '17 28 JAN '18 27 JAN '19 26 JAN '20 31 JAN '21
835
906
1,175
1,672
3,502
3,743
4,761
5,822
440
631
614
3,047
4,141
2,796
4,332
395
275
561
6
455
-398
1,965
1,490
136
239
158
220
204
197
247
187
391
199
557
262
844
381
1,397
1,098
-
28
-
36
-
5
24
-
-
33
-
-
-
28
03-
-17
-6
-3
-1 -
19
-
83
11
-
134
-
-
-
-10 -26
-
-
197
21
-
-18
-10
0
29
25
-203
-49
-95
-51
-32
-679
-321
-375
12
4
75-
66
-16
-
21
-
-
-
-
18
0-
-857
-149
-776
0
-703
-550
-524
597
77
-
-135
-282
717
-233
-55
-
-20
-
-315
0-
5
0
185
-440
-18
-
18 -359
19
-
-45
0
25
24
12
20
45
29
-
15
87
-
-
1,666
-394
-
-20
-27
-11
184
90
-32
-36
-58
514
258
82
402
5
39
33
481
256
2
54
28
239
163
194
363
-41
-97
-149
-135
-14
-806
2,512
-727
2,237
-400
3,138
-793
2,515
1,278
1,941
-4,097
7,660
6,145
8,109
-19,675
9,319
585
865
1,036
969
1,078
7,232
4,744
8,792
-
1,927
2,102
0-
1,546
-17
1,372
0
-3,065
-255
-2,862
-122
-3,477
-86
-3,134
-176
-
-
-
863
-
-
0
-36
-593
-36
-
24
-5
-1
-6
-5 -
21
7
7
2
291
-2,544
390
-834
-
1,478
-676
-
0
0
0
-167
59
70
-
0
00-
153
120
-9
-
-
-
-
-
-
-
-
-181
-
-186
-
-213
-
alance sheet:
-
1,152
497
-
-14.6
-2.5
-5.10
3.33
99
497
596
-
-14.5
-17.2
2.97 9.61
-
-1,032
-
-551
-371
-
-942
-
-390
-395
-17
-
0-
-5
0
-4
-7
-
-
00-
-
-
-9 -
-
-
-14.0
-13.0
-22.0
-55.0
-61.0
-55.0
-
36.00
-10,049
10,114
782
10,896
4,002
782
-
-
16.00
-3,220
2,236
1,766
4,002
-
-
19.00
194
-341
1,170
596
1,766
-14.0
-17.0
-748
149
-9
0
419
733
1,152
-402
137
0
0
10
-6
-3 -3 -
-895
-16
-1,579
-15
-8
-5
-3
-3
-655
3,804
-
-812
-909
4
-7
-2
-5
-792
-
-673
-739
-587
-
-
0-
4,968
0
0
13
18
-2,866
0
-814
-
-
139
-
19
26
-19,308
-1,128
-8,558
-8,524
-34
-473
-
-
-1,461
-489
-14
0
-612
-261
527
-
-
-
-
-887
-
-11,148
-600
-9
-
1,988 -
3,365
-
0-
25
-
428
10,896
847
-
-176.0
-54.0
-
76.00 -
-249.0
-138.0
-
-
-25.00
-
0.00
-
-
0.00 -
-
-
-
-
-
-
-
30 JAN '22 29 JAN '23
9,108
5,641
9,752
4,368
-644
1,273
2,004
1,174
2,709
1,544
1,353
-53
38
-
-100
45
47
-
-7
-
-406
-2,164
-
-
-
-3,363
-2,215
-774
-2,207
822
-2,554
-1,715
-
-1,517
-
568
-551
773
1,593
581
192
1,341
252
-9,830
16,220
7,375
21,231
15,197
19,425
1,023
-
1,806
-11,897
-1,833
-126
-49
-77
-24,787
-976
-287
-263
-24
-
-
-
1,865
-
-11,617
-
-1,623
-11,159
281
355
-1,904
-10,039
-1,475
-
-399
-83
-398
-58
4,977
0
0
-1,000
-
-7
-2
-
-
-
-
1,143
847
1,990
-
1,399
1,990
3,389
-
-396.0
-246.0
-
-1,404.0
-254.0
-
-
-
-
-