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