Nvidia Stock Has Grown 2.5x In Less Than Five Years- Here’s Why

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Nvidia Corporation (NASDAQ: NVDA) stock price rose more than 2.5x from $48 in 2017 end to around $125 currently, primarily due to favorable changes in its sales. During this period, the company witnessed a strong 206% rise in revenues, and despite a 19% drop in its P/S multiple and a 5.4% rise in the outstanding share count, the company’s stock price has rallied. Further, over the same period, the S&P 500 returned around 40%, meaning that NVDA stock has managed to strongly beat the index since 2017-end.

In our interactive dashboard, Why Nvidia Stock Moved: NVDA Stock Has Gained 159% Since 2017, we break down the factors behind this move.

(A) NVDA’s Total Revenue has grown 206% from $9.7 billion in FY 2018 to $29.7 billion on an LTM basis

  • NVDA’s total revenue hovered between $10 billion to $12 billion from FY ’18 to 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 even higher at $29.7 billion (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 191% from $4.06 in FY 2018 to $11.79 currently

  • NVDA’s revenue rose from $9.7 billion in FY 2018 to $29.7 billion currently, while the outstanding share count rose from 2.4 billion in FY 2018 to around 2.5 billion currently.
  • Due to this, RPS has jumped almost 3x from $4.06 in FY ’18 to $11.79 currently.

(C) Price-To-Sales (P/S) multiple for NVDA rose strongly from 13.1x in 2017 to 46.4x by 2021 end, but has pulled back to 10.6x currently, lower than its 2017 level

  • NVDA’s P/S multiple rose strongly to around 46.4x 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 10.6x.
  • For additional details about the company stock returns and comparison to peers, see Nvidia (NVDA) Stock Return Comparison.

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 Returns Sep 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 NVDA Return -17% -57% 371%
 S&P 500 Return -6% -22% 65%
 Trefis Multi-Strategy Portfolio -11% -25% 198%

[1] Month-to-date and year-to-date as of 9/26/2022
[2] Cumulative total returns since the end of 2016

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