What NVIDIA Isn't Telling You About Its Astronomical Growth

NVIDIA, the king of AI chips, excels in financial agility, strategic supplier relations, and efficient inventory turnover, cementing its position as a semiconductor industry leader. ??

?? Leveraging impressive O2C metrics—101 days average CCC, 8 days lower DSO, 22% faster DIO, and 2x faster DPO than competitors—it continues to set the standard.?

With rivals eyeing its AI crown, can NVIDIA maintain its working capital edge?

Let’s deep dive into the numbers! ????♂?

?? Read the full analysis here.

NVIDIA's revenue skyrocketed by 265% ??

NVIDIA's stock surged to a record high of $522 per share, jumping 6.4% in a day and skyrocketing over 230% in the past year!

?? Here are some recent stock updates at NVIDIA and their financial impact:

1. Revenue Surge: In Q1 2024, NVIDIA posted a 265% annual revenue surge, reaching $22.1 Bn, fueled by AI-driven innovations and robust demand for its premier AI chips.

2. Data Center Expansion: NVIDIA's data center segment, its top revenue driver, saw extraordinary growth with sales soaring 409% to $18.4 Bn in the last fiscal quarter.

3. Market Capitalization Rise: Following NVIDIA's earnings announcement, a surge in stock pushed its market cap up by over $129 Bn.

4. Supply Chain Challenges: Despite improvements, NVIDIA's CEO, Jensen Huang, acknowledged ongoing difficulties in meeting the surging chip demand.

NVIDIA's CCC stands at 101 Days ??

From 2020 - 24, NVIDIA’s cash conversion cycle (CCC) has been averaging around 101 days.

• In 2023, its CCC rose to 133 days, suggesting possible challenges in financial management.
• As NVIDIA dealt with this, its competitors AMD and Intel gained attention; AMD had a CCC of 129 days, while Intel had a low CCC of just 60 days.

Now, let’s look into its Days Sales Outstanding (DSO), Days Payable Outstanding (DPO), & Days Inventory Outstanding (DIO) metrics to understand better what drove these CCC scores!

NVIDIA DSO is 8 days lower than the industry ??

Over the past five years, NVIDIA’s Days Sales Outstanding (DSO) averaged 41 days, significantly below the industry’s 49-day average.

In 2023, its DSO increased to 57 days while AMD’s stood at 63 days, highlighting NVIDIA’s ability to manage receivables and cash flow.

?? Know how NVIDIA consistently maintains steady DSO levels here .

NVIDIA clears inventory 22% faster than its peers ??

NVIDIA’s Days Inventory Outstanding (DIO) averaged 103 days over 2020-2024, outperforming the industry average of 125 days. Consistent DIO levels indicate robust supply chain management.?

In 2023, NVIDIA’s DIO at 122 days surpassed rival Intel’s 136 days, showcasing superior inventory turnover efficiency.?

?? Know how NVIDIA maintains a lower DIO than its peers here .

NVIDIA pays suppliers 2x faster ??

Over the past five years, NVIDIA has consistently maintained a low Days Payable Outstanding (DPO) of around 50 days, showcasing effective supplier relations and payment management.

• In 2023, NVIDIA’s DPO improved to 47 days, indicating efficient payment processing.
• Intel’s DPO stood at a notably higher 102 days, highlighting NVIDIA’s superior management of supplier relationships and payment timelines.

?? Learn how NVIDIA keeps a good relationship with its suppliers here .

Mining Millions: NVIDIA Ahead in the Cash Race ??

Despite supply challenges, NVIDIA has optimized inventory management, quick sales, and payments, revolutionizing industries with graphics and AI technologies.

At its 2024 conference, over two dozen new AI tools targeted drug discovery, surgery, and medical imaging.

As NVIDIA mines opportunities in AI and healthcare, will it maintain its lead in converting chips to cash? For now, NVIDIA’s formulas have it maintaining millions through a diversifying portfolio.

?? Read the full analysis here .