I am only making a comment on the raw magnitude of money they are making and making some simple calculations with it.
For the quarter, $46.7 billion in revenues. Gross margin of 72%. Bottom-line after-tax figure of $26.4 billion.
The half-year figures look “worse”, with 67% gross margins and a $45.2 billion bottom-line, but man, that’s still a crazy ton of money they are making.
Let’s take the quarter that has just passed and multiply by 4. I know these figures are projected to grow (for how long?) but let’s just play with the past quarter and extrapolate.
The last quarter times 4 is $106 billion a year in income annualized, or $4.31 per diluted share.
NVidia closed trading at $181.60 per share, giving it a P/E of 42.
What’s funny is there are some other well established companies that are even more expensive when using this simple metric.
Costco, for example, is trading at a P/E of 55. One isn’t going to accuse Costco of having their customers wanting to build trillions of dollars of factories to sell product in Costco’s warehouses, or having 70% gross margins for that matter!
However, let’s go back to NVidia.
If I was a serious long-term investor (not too many of those left these days), the biggest concern of mine would be on the cash flow statement.
In the first half of the fiscal year (start of February to end of July) they generated $42.8 billion in cash through operations. This is less than the net income primarily due to increases in AR and inventories – this is logical considering their revenues are skyrocketing.
However, the biggest concern I would have is the $23.8 billion they blew out the door in stock repurchases and the additional $3.4 billion paid out in taxes relating to option exercises.
What did shareholders get for $23.8 billion going out into the equity markets? In Q4-2024, NVDA had 24.489 billion weighted shares outstanding (basic), while in Q2-2025 they had 24.366 billion, a reduction of 123 million shares or 0.5% of shares outstanding. Percentage-wise it is a drop in the bucket, but because we are dealing with huge numbers, $23.8 billion dollars could have gone in many other places! Perhaps they could buy 20% of Intel along with the US Government……
Needless to say, a lot of hidden compensation is going out the window in equity. While employees and executives are getting very rich (if you have some and haven’t diversified yet, might be a good time to consider it!), shareholders will eventually be paying for this somewhat more hidden compensation. It is a repeat of the dot-com era stock option craze – the public investors have done well, but the buyback is a serious cash drag on the company.