• 1Q26 revenue was within our expectations, while PATMI underperformed. 1Q26 revenue/PATMI was 21%/18% of our FY26e forecast. PATMI was impacted by a one-off US$4.5bn inventory charge from H20 chips which could not be sold to China due to US export restrictions.
• Revenue beat Nvidia’s own guidance by ~3%, driven by Blackwell GPU sales which contributed ~70% of data center revenue in 1Q26. Growth is expected to continue in the data center segment as major hyperscalers still guide higher CAPEX, and Nvidia sees further demand from hyperscalers in 2Q26e.
• We maintain ACCUMULATE with a higher target price of US$145 (prev. US$130). We lower our FY26e PATMI by ~3% to reflect the impact of the US$4.5bn inventory write down. FY26e revenue is unchanged. Given better clarity of US export impact on Nvidia’s China segment, we lower our WACC to 7.5% (prev. 7.9%).

• FY25 revenue was within expectations, while PATMI beat our expectations. Revenue/PATMI was 100%/106% of our FY25e forecast. Blackwell shipments started in 4Q25, driving revenue growth by +78% YoY and not dragging down gross margins as much as we expected.
• Nvidia’s gaming segment (9% of FY25 revenue) dropped 11% YoY due to supply constraints. However, demand for RTX 50 series desktop and laptop GPUs remains strong, and we expect gaming revenue to recover by 1Q26e.
• We maintain ACCUMULATE with a lower target price of US$130 (prev. US$160). We adjusted our FY26e revenue/PATMI by 5%/-3% to reflect expected Blackwell ramp until 3Q26e, which is expected to drive revenue growth but lower margins. We believe record CAPEX figures from hyperscalers will continue to drive growth in the data center segment. Given short-term uncertainties from tariff/retaliation announcements, we raised our WACC to 7.9% (prev. 6.8%).

• Nvidia’s CEO Jensen Huang presented at the Consumer Electronics Show, CES2025 to unveil several new AI products at the event. The most significant was the NVIDIA DRIVE Thor, which is an AI chip to be used in autonomous vehicles. Thor is built based on the Nvidia Blackwell architecture and delivers 20x the performance of NVIDIA DRIVE Orin, its predecessor.
• Toyota's partnership was announced at the event. Revenue growth in the automotive segment (1.8% of FY24 revenue) is expected to grow by almost 5x from FY24 to FY26e.
• Maintain ACCUMULATE with unchanged TP of US$160. Revenue and PATMI growth due to the new AI products are not expected to be material in FY25e and FY26e.

• 3Q25 results met our expectations. Revenue beat NVDA’s guidance by 8%, and PATMI was up by 109% YoY. 3Q25 revenue/PATMI was at 70%/74% of our FY25e forecasts.
• Hyperscalers make up around half of data centre sales, with the remaining sales coming from enterprises and sovereign nations. Blackwell will be in production for 4Q25, and NVDA expects Blackwell revenue to exceed their previous estimate of “several billion dollars”. NVDA guided the initial ramp of Blackwell to lower gross margins to “moderate to low-70s”, Blackwell margins to be in the mid-70s when fully ramped.
• We downgrade BUY to ACCUMULATE due to recent price movements, with a higher target price of US$160 (prev. US$155). We kept our FY25 revenue/PATMI unchanged and raised our FY26e revenue/PATMI by 5%/7% to reflect the stronger ramp-up of its data accelerator platforms (Hopper + Blackwell) and lower anticipated corporate tax rates. We lowered our margins assumptions for FY26e to reflect management guidance of lower margins due to Blackwell products. Our WACC/g is unchanged (6.8%/4.5%).

• 2Q25 results exceeded expectations on still strong AI demand and continued supply ramp. Revenue beat NVDA’s own guidance by 7%, and PATMI jumped >2.5x YoY. 1H25 revenue/PATMI was at 46%/49% of our FY25e forecasts.
• 2.5x YoY growth supported by demand from Hypserscalers (45% of revenue), Enterprises, and Sovereign nations. Forward guidance still implies 80% YoY growth in 3Q25e, while supply-demand equilibrium is expected to be reached in mid-FY26e.
• We raise our FY25e/FY26e revenue by 9% to reflect higher demand for Data Centre GPUs (Hopper + Blackwell). Our margin assumptions remain unchanged. We maintain BUY with a raised target price of US$155 (prev. US$140). Our WACC/g is unchanged (6.8%/4.5%). NVDA still dominates (~90% share) AI GPUs, which are benefitting from secular tailwinds from a shift to accelerated computing and increasingly complex Gen AI models.

• 1Q25 results exceeded expectations on more robust AI demand. Revenue beat NVDA’s own guidance by 9%, and PATMI jumped >7x YoY. 1Q25 revenue/PATMI was at 25%/28% of our FY25e forecasts.
• US$4bn sequential ramp-up in AI GPU supply is expected to continue QoQ until the end of FY25e, implying 30% higher DC revenue vs. our previous forecasts. Demand still far outstrips supply, with NVDA also announcing a 1-year cadence for new product launches post Blackwell.
• We raise our FY25e/FY26e revenue by 14%/38% to reflect stronger demand for Data Centre GPUs (Hopper + Blackwell). NVDA dominates (~90% share) AI GPUs that are growing 5x YoY, with superior product performance and an accelerating product pipeline. We maintain BUY with a raised target price of US$1400 (prev. US$970). Our WACC/g is unchanged (6.8%/4.5%).

The Positives

+ Revenue outperformed again, led by 5x YoY growth in Data Centre (Hopper) demand. NVDA’s US$26bn in revenue for 1Q25 outperformed again, beating its own guidance by 9% (US$2bn). Growth more than tripled YoY for a 3^rd straight quarter, led mostly by a 5x/3x YoY increase in demand for its DC compute/networking products like Hopper/InfiniBand – from Cloud hyperscalers and consumer internet companies. Inferencing made up ~40% of DC revenue, with sequential DC growth driven by Tesla’s 35K H100 GPUs expansion. NVDA’s gaming segment also grew 18% YoY due to strong end-customer demand for AI PCs equipped with its GeForce RTX GPUs and normalized channel inventory levels.

+ NVDA working hard on increasing supply, 1Q25 results imply ~US$4bn sequential ramp. NVDA’s DC revenue of US$22.6bn implies a sequential increase of ~US$4bn. Given NVDA’s comments on trying to acquire more supply, coupled with current demand-supply dynamics, we assume that most of this came from an increase in chip supply from TSMC. Since 1Q24, DC revenue has also increased sequentially at this US$4bn-US$5bn rate. We expect this rate of increase to continue at least until the end of the year given the 1) current strength in demand and 2) Blackwell shipments beginning in 2Q25e (higher ASPs vs Hopper), which would imply ~US$113bn-US$115bn DC revenue for FY25e – 30% higher than our previous estimates.

+ Aggressive yearly product launch beyond FY25e, low risk of product transition. CEO Jensen Huang reiterated its focus on launching new products at a faster cadence (annually) as it looks to continue outpacing its competitors, announcing a new AI GPU chip after Blackwell that is slated to launch next year officially. Concerns over the risk of customers waiting for newer chips were also alleviated as Hyperscalers average into newer technologies given the early stages of their accelerated compute build-out. In addition, newer platforms like Blackwell are backward compatible, meaning no transitional issues from Hopper.

The Negative

- Nil.

• 4Q24 results exceeded expectations. Revenue beat NVDA’s own guidance by 11%, and PATMI jumped >8x YoY. FY24 revenue/PATMI was at 103%/108% of our FY24e forecasts.
• Data Centre (DC) revenue growth accelerated (409% YoY), driven by: 1) >5x YoY increase in demand for its H100 AI GPUs; 2) 3x YoY increase in network revenue from Infiniband. Forward guidance of 200+% YoY revenue growth and expanding gross margins (76.3%) in 1Q25e, indicating continued strength. We expect 1Q25e DC revenue to surpass US$20bn.
• We raise our FY25e revenue/PATMI by 29%/35% to reflect continued demand for Data Centre products. NVDA dominates (~90% share) AI GPUs that are growing 5x YoY, with demand driven by a global shift to accelerated computing for more intense workloads (Gen AI/LLMs). We maintain a BUY rating with a raised target price of US$970 (prev. US$685) as we roll over an additional year of valuations. Our WACC/g is unchanged (6.8%/4.5%).

The Positives

+ AI demand still exceptional, driving outperformance. Revenue of US$22.1bn beat guidance again by ~11%, with most of the outperformance driven by DC gains (409% YoY). Demand from consumer internet companies (META, GOOGL, etc.), Cloud Hyperscalers (CSPs), and sovereign nations remain robust, with NVDA also seeing growth across various industries – auto, healthcare, and financial services. Supply is improving, although it is still unlikely to meet the excess demand for high-spec AI GPUs anytime soon. Near-term demand remains supported by transition to accelerated computing for Gen AI applications (recommender systems), inferencing LLMs (ChatGPT, Gemini, etc.), expanding sovereign AI infrastructure.

+ Gross margin beat by 150bps, forward guidance pointing to more upside. NVDA’s gross margin (76%) continued to improve for the 6th quarter. Driven by higher-margin DC revenue mix (83% of total revenue) and lower component costs, which are expected to flow into 1Q25e, NVDA guided to a 76.3% gross margin. Prior to FY24, gross margins had historically been ~60%. NVDA also guided 1Q25e revenue to US$24bn +/- 2%, implying a 234% YoY improvement driven predominantly by DC (H100 + Infiniband). We expect DC revenue to easily cross US$20bn as NVDA works through improving supply to fulfill its order backlog.

The Negative

- China is still a question mark. US export restrictions were a significant headwind, with DC revenue from China (incl. Hong Kong) dropping to ~5% of total DC revenue in 4Q24 from ~22% in 3Q24. NVDA began shipping its lower-spec H20 GPU chips for market sampling, although management did not seem too optimistic about competing with local Chinese semicon companies like Huawei, given the ceiling imposed on GPU specifications.

Outlook

Guidance: NVDA guided to 1Q25e revenue of US$24bn (+/- 2%), implying a further acceleration in YoY growth. Gross margins were guided to 76.3%, a sequential 30bps expansion due to a more favourable shift in mix to higher-margin DC products and lower component costs. Gross margins are expected to contract for the rest of FY25e to 73-74% as the benefits from lower component costs fade. Operating expenses are expected to increase 40% YoY.

Outlook: Robust near-term growth expectations look sustainable with demand far outpacing supply. NVDA dominates the AI GPU market (~90% market share) with multiple growth drivers from 1) increasing investments from enterprises for training and inferencing LLMs, deep learning, recommender systems, and generative AI applications; 2) hyperscale CSPs expanding into new market opportunities; 3) sovereign nations building their own AI infrastructure to; and 4) growing AI adoption across multiple industries – auto, healthcare, industrial, telco, etc. In addition, NVDA has a strong product lineup for FY25e (H200, B100, Spectrum-X, etc.), each of which are expected to drive incremental growth in ASPs and margins.

The main risks to growth remain: 1) inability to compete with other Chinese manufacturers on its H20 chips, market share may be permanently lost; 2) insufficient supply to meet the growing demand for high-end GPUs and components as the world transitions towards higher accelerate computing.

RULE OF 40

The “Rule of 40” was first introduced as a benchmark to measure the balance between the growth and profitability of SaaS companies, taking into account both revenue growth as well as profitability (Revenue Growth + EBITDA Margins), with the addition of both metrics needing to exceed the 40% threshold. We have modified this slightly by averaging revenue growth over a

3-year period compared with just a single period growth rate. Adding together NVDA’s 3-year average revenue growth of 54% and its EBITDA margin of 63%, the total of 117% is more than our required threshold of 40% (Figure 2).

Maintain BUY with a raised target price of US$970 (prev. US$685)

We raise our FY25e revenue/PATMI by 29%/35% to reflect continued demand for Data Centre products. NVDA dominates (~90% share) AI GPUs that are growing 5x YoY, with demand driven by a global shift to accelerated computing for more intense workloads (Gen AI/LLMs). We maintain a BUY rating with a raised target price of US$970 (prev. US$685) as we roll over an additional year of valuations. Our WACC/g is unchanged (6.8%/4.5%).

• 3Q24 results exceeded expectations. Revenue beat NVDA’s own guidance by 13%, with PATMI spiking 13x YoY. 9M24 revenue/PATMI was at 75%/80% of our FY24e forecasts.
• Data Centre (DC) revenue grew almost 4x YoY, driven by: 1) Enterprises and nations inferencing large language models (LLMs); 2) Cloud Service Providers (CSPs) expanding into new markets; 3) 5x YoY growth in demand for InfiniBand.
• Upbeat 4Q24e revenue guidance of US$20bn implies 231% YoY growth, and US$59bn for FY24e. US export controls to China remain an uncertainty, with revenue from China expected to decrease substantially in 4Q24e.
• We raised our FY24e revenue/PATMI by 13%/27% for the stronger demand of Data Centre products. NVDA dominates AI GPUs that is growing ~4x YoY. Demand is driven by a global shift to accelerated computing for generative AI applications, and inferencing LLMs. We maintain a BUY rating with a raised target price of US$685 (prev. US$645). Our WACC/g is unchanged (6.8%/4.5%).

The Positives

+ Demand for Data Centre GPUs still outpacing supply. DC growth continues to be driven by: 1) Increased investments from consumer internet companies into inferencing LLMs and generative AI applications; 2) Hyperscale CSPs expanding into new market opportunities; 3) 5x YoY increase in demand for InfiniBand (Networking >US$10bn annual run-rate). To meet the demand, NVDA has been increasing supply QoQ this year, and expects to continue this into FY25e. DC revenue spiked 280%/41% YoY/QoQ as a result. We expect near-term demand to remain strong given overflowing customer commitments.

+ 4Q24e revenue guidance implies 231% YoY growth. NVDA guided US$20bn (+/- 2%) in revenue for 4Q24e, implying further acceleration in revenue growth – above consensus estimates of US$18bn. Most of the growth is expected to be driven by DC demand, and takes into account a significant drop in revenue contribution from China due to US export controls. Taking this guidance, our FY24e revenue is raised 13% to US$59bn, implying a 118% YoY growth. 4Q24e gross margins are also expected to increase sequentially to 74.5% due to a favourable product mix as demand for higher margin DC products continue to expand, with NVDA ending FY24e with a 72% gross margin, 1500bps higher than FY23.

The Negative

- Export controls expected to impact China revenue in 4Q24e. US government export control regulations to China are expected to impact revenue from China moving forward, with limited visibility on its long term impact. NVDA is working on regulation-compliant products for the affected markets, although the contribution from these products is not expected to be meaningful in the near term. China revenue represents 20-25% of NVDA’s total revenue.

Outlook

Guidance: NVDA guided to 4Q24e revenue of US$20bn (+/- 2%), implying a further acceleration in YoY growth as demand for its DC products is extremely robust. NVDA also guided a gross margin of 74.5%, a sequential 50bps expansion due to a more favourable shift in mix to higher-margin DC products.

• 2Q24 results exceeded expectations. 2Q24 revenue/PATMI at 54%/63% of our FY24e forecasts. 2Q24 PATMI spiked by 8-fold YoY.
• Revenue doubled and beat guidance due to Data Centre sales nearly tripling YoY. 3Q24 guidance of a 170% YoY jump in overall revenue driven by continued strong demand for accelerated computing server products, with demand visibility extending into next year.
• Gaming returns to positive YoY growth, while ProViz continues its YoY decline. Automotive saw QoQ decline as it faces lower demand from China OEMs.
• We increase our FY24e revenue/PATMI by 35%/69% to account for the stronger-than-expected growth in Data Centre business. We upgrade from ACCUMULATE to a BUY rating with an increased target price of US$645.00 (prev. US$440.00), with a WACC of 6.8%, and a terminal growth rate of 4.5%.

The Positives

+ Data Centre driving strong revenue beat. Revenue doubled YoY to US$13.5bn, beating company guidance of US$11bn. The strong performance was attributed to Data Centre business surging by 171% YoY to make up 76% of total revenue, driven by accelerating demand from cloud service providers and consumer internet companies for NVDA’s HGX server platform. Data Centre growth mainly came from US customers, while China makes up 20-25% of the segment’s revenue, in line with historical trends. Gross margins also expanded by 550bps QoQ and 26.6pps YoY as a result of larger revenue contribution from the server business.

+ An even stronger 3Q24 guidance. NVDA guided for a revenue of US$16bn (+/- 2%), a potential 170% YoY jump, largely driven by Data Centre strength as customers continue to focus their investments on generative AI and accelerated computing. NVDA said this allows it to have demand visibility that extends into CY2024. As such, the company is working with suppliers to expand production capacity, and will be increasing supply over the next several quarters to fulfill the demand. Gross margins are expected to be at 71.5% (+/- 50bps), another strong 17.9pps YoY expansion.

+ Gaming returns to positive growth. Sales was up by 22% YoY, the first positive growth following 4 consecutive quarters of YoY decline. The increase was fueled by the solid end-customer demand for the GeForce RTX 40 Series GPUs, partly driven by the back-to-school season. NVDA believes the global end demand has returned to growth following the slowdown in CY2022. Furthermore, it also believes the segment has a large upgrade opportunity as only 47% of its installed base are on GPUs equipped with its RTX technology.

The Negatives

- Professional Visualisation down YoY, Automotive down QoQ. Professional Visualisation (3% of revenue) declined by 24% YoY, but contraction has moderated significantly from the -53% in 1Q24. In Automotive, revenue was up by 15% YoY to US$253mn, but was down 15% QoQ due to the lower overall demand from Chinese OEMs.

• 1Q24 results were within expectations. Revenue/PATMI was at 24% of our FY24e forecasts.
• Revenue beat guidance due to growth in the Data Centre segment. 2Q24 guidance of a 64% YoY growth in sales, largely driven by steep demand in Generative AI and LLMs across its customer base.
• Sales for Gaming, and Professional Visualisation continued their YoY contraction but moderated compared to their YoY decline in 4Q23. Revenue for both segments were up QoQ as NVDA ramps its new Ada Lovelace-based GPUs.
• We increase our FY24e revenue/PATMI by 30%/52% to account for the higher-than-expected growth in Data Centre business and lower-than-expected operating expenses. We downgrade from BUY to ACCUMULATE rating with an increased target price of US$440.00 (prev. US$315.00), with a WACC of 6.8%, and a terminal growth rate of 4.5%, due to the recent share price performance.

The Positives

+ Revenue beat company guidance. Revenue was down 13% YoY to US$7.2bn, but this was above company guidance of US$6.5bn. The better-than-expected performance was driven by 14% YoY growth in Data Centre sales, which set a new record of US$4.3bn. NVDA attributed the growth to the surge in demand across its customer base (cloud service providers, consumer internet, and enterprises) who are looking to harness the technology of generative AI and large language models (LLMs) that use the company’s Hopper and Ampere GPUs.  

+ Strong 2Q24 guidance. NVDA guided for a revenue of US$11bn (+/- 2%), which is ~53% above consensus estimates of US$7.2bn, and represents a 64% YoY growth, following YoY sales contraction since 3Q23. The company said the growth will largely be driven by its Data Centre business benefiting from the steep increase in demand related to Generative AI and LLMs. NVDA said this allowed it to extend its visibility of the segment’s business out a few quarters. Although no guidance was provided beyond 2Q24, NVDA noted that it will be procuring a significantly higher level of supply for 2H24, where it indicated that sales will be higher than that of 1H24. Gross margin is expected to be 68.6%, indicating a potential 25% YoY expansion (6.6% on a normalised basis as NVDA incurred a US$1.2bn inventory charge in 2Q23) as it sells more of its new H100 data centre GPUs, where we believe the price difference is as much as 200% compared to its previous A100.

The Negatives

- Gaming, Professional Visualisation contraction continues. Gaming/Professional Visualisation revenue declined 38%/53% YoY as both businesses continue to face macroeconomic headwinds and lower sell-in to normalise channel inventory. However, the contraction has moderated compared to 4Q23 where they declined 46%/65% YoY, and sales were up QoQ by 22%/31% as NVDA ramps its new GPUs based on Ada Lovelace architecture.