Economic Value Added (EVA)
EVA is registered trademark of Stern Stewart.
Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.
Economic Profit
NVIDIA Corp., economic profit calculation
US$ in millions
Based on: 10-K (reporting date: 2026-01-25), 10-K (reporting date: 2025-01-26), 10-K (reporting date: 2024-01-28), 10-K (reporting date: 2023-01-29), 10-K (reporting date: 2022-01-30), 10-K (reporting date: 2021-01-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2026 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 119,408 – 27.38% × 104,952 = 90,669
The financial trajectory indicates a period of exponential growth in value creation, characterized by a sharp recovery and subsequent acceleration in economic profit. While a period of value destruction occurred in 2023, the subsequent years demonstrate a massive scaling of operational profitability that far exceeds the growth of the capital base.
- Net Operating Profit After Taxes (NOPAT)
- A volatile but aggressively upward trend is observed. After a significant contraction in 2023, where NOPAT fell to 2,334 million US$, the figure surged to 119,408 million US$ by 2026. This represents a dramatic increase in operational efficiency and earnings power over the analyzed period.
- Cost of Capital
- The cost of capital has remained remarkably stable, fluctuating minimally between 26.82% and 27.38%. This stability indicates a consistent risk profile and a steady weighted average cost of capital despite the massive growth in the scale of operations.
- Invested Capital
- There is a consistent upward trend in invested capital, growing from 13,232 million US$ in 2021 to 104,952 million US$ in 2026. The most significant expansion occurred between 2025 and 2026, where the capital base more than doubled, suggesting heavy strategic investment to support the growth in NOPAT.
- Economic Profit
- Economic profit exhibited a profound U-shaped recovery. The dip into negative territory in 2023 (-3,435 million US$) signifies a period where the return on invested capital fell below the cost of capital. However, the subsequent recovery was rapid, with economic profit reaching 90,669 million US$ by 2026. The widening gap between NOPAT and the capital charge confirms that the entity is generating substantial value above its minimum required return.
The relationship between the metrics suggests that the surge in economic profit is primarily driven by an explosion in operating income rather than a reduction in the cost of capital. The ability to maintain a stable cost of capital while increasing the absolute magnitude of economic profit indicates high scalability and strong competitive advantages.
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Net Operating Profit after Taxes (NOPAT)
NVIDIA Corp., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2026-01-25), 10-K (reporting date: 2025-01-26), 10-K (reporting date: 2024-01-28), 10-K (reporting date: 2023-01-29), 10-K (reporting date: 2022-01-30), 10-K (reporting date: 2021-01-31).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowance for doubtful accounts.
3 Addition of increase (decrease) in deferred revenue.
4 Addition of increase (decrease) in accrual for product warranty liabilities.
5 Addition of increase (decrease) in equity equivalents to net income.
6 2026 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 2,944 × 4.38% = 129
7 2026 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 388 × 21.00% = 81
8 Addition of after taxes interest expense to net income.
9 2026 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 2,300 × 21.00% = 483
10 Elimination of after taxes investment income.
Net income and net operating profit after taxes (NOPAT) demonstrate significant fluctuations over the observed period. While both metrics generally trend upward, notable variations exist, particularly in the earlier years. A substantial increase in both metrics is evident in the most recent periods.
- Overall Trend
- Both net income and NOPAT exhibit an overall positive trend from 2021 to 2026. However, the rate of increase is not consistent. The period between 2021 and 2023 shows modest growth, followed by accelerated expansion from 2023 onwards.
- NOPAT Analysis
- In 2021, NOPAT stood at US$4,425 million. It increased to US$9,602 million in 2022, representing substantial growth. A significant decrease is then observed in 2023, with NOPAT falling to US$2,334 million. This decline suggests potential operational challenges or increased costs impacting profitability during that year. From 2023 to 2026, NOPAT experiences a dramatic recovery and expansion, reaching US$119,408 million in 2026. This represents a considerable improvement and suggests successful strategic adjustments or favorable market conditions.
- Relationship between Net Income and NOPAT
- The values for net income and NOPAT are closely aligned across all periods, indicating a consistent relationship between operating profitability and overall net earnings. The difference between the two metrics appears relatively stable, suggesting that non-operating items have a limited impact on the company’s overall profitability. The substantial increases observed in both metrics from 2023 to 2026 are proportionally similar, reinforcing this observation.
The pronounced growth in both net income and NOPAT in the later years of the period warrants further investigation to understand the underlying drivers. The dip in NOPAT in 2023 also requires scrutiny to identify the factors contributing to the decline and assess the effectiveness of subsequent recovery strategies.
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Cash Operating Taxes
NVIDIA Corp., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2026-01-25), 10-K (reporting date: 2025-01-26), 10-K (reporting date: 2024-01-28), 10-K (reporting date: 2023-01-29), 10-K (reporting date: 2022-01-30), 10-K (reporting date: 2021-01-31).
A significant increase in both income tax expense (benefit) and cash operating taxes is observed over the analyzed period. While income tax expense initially shows a benefit in 2023, it transitions to substantial expenses in subsequent years. Cash operating taxes demonstrate a consistent upward trajectory throughout the entire period.
- Income Tax Expense (Benefit)
- Income tax expense begins at US$77 million in 2021, increasing to US$189 million in 2022. A notable shift occurs in 2023, with a benefit of US$187 million recorded. This is followed by a dramatic rise in expense, reaching US$4,058 million in 2024, US$11,146 million in 2025, and further increasing to US$21,383 million in 2026. The volatility suggests potential changes in tax regulations, profitability, or the utilization of tax credits.
- Cash Operating Taxes
- Cash operating taxes exhibit a steady increase from US$390 million in 2021 to US$643 million in 2022. The growth accelerates in 2023, reaching US$1,983 million. This upward trend continues with values of US$6,430 million in 2024, US$15,316 million in 2025, and US$22,405 million in 2026. The consistent growth in cash operating taxes likely correlates with increasing operational profitability and scale.
The divergence between income tax expense (benefit) and cash operating taxes is noteworthy. While income tax expense fluctuates, including a significant benefit in 2023, cash operating taxes consistently increase. This difference could be attributed to timing differences between when income is recognized for accounting purposes versus when cash is actually paid for taxes, or the impact of deferred tax assets and liabilities. The substantial increases in both metrics from 2023 onward warrant further investigation to understand the underlying drivers and potential implications for future financial performance.
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Invested Capital
NVIDIA Corp., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2026-01-25), 10-K (reporting date: 2025-01-26), 10-K (reporting date: 2024-01-28), 10-K (reporting date: 2023-01-29), 10-K (reporting date: 2022-01-30), 10-K (reporting date: 2021-01-31).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of allowance for doubtful accounts receivable.
4 Addition of deferred revenue.
5 Addition of accrual for product warranty liabilities.
6 Addition of equity equivalents to shareholders’ equity.
7 Removal of accumulated other comprehensive income.
8 Subtraction of construction in process.
9 Subtraction of marketable securities.
The reported invested capital demonstrates a consistent upward trajectory over the observed period. This growth is supported by increases in both total reported debt & leases and shareholders’ equity, though the contributions of each component have varied year to year.
- Total Reported Debt & Leases
- Total reported debt & leases increased from US$7,718 million in 2021 to US$11,831 million in 2022, representing a substantial rise. While it continued to increase to US$12,031 million in 2023, the rate of growth slowed. A decrease to US$11,056 million was observed in 2024, followed by a further decline to US$10,270 million in 2025. However, the most recent year, 2026, shows an increase to US$11,412 million. This suggests a fluctuating reliance on debt financing.
- Shareholders’ Equity
- Shareholders’ equity experienced significant growth, increasing from US$16,893 million in 2021 to US$26,612 million in 2022. A decrease to US$22,101 million was noted in 2023, but a substantial increase occurred in 2024, reaching US$42,978 million. This growth continued at an accelerated pace, with equity reaching US$79,327 million in 2025 and further increasing to US$157,293 million in 2026. This indicates a strong and accelerating trend of equity financing and/or retained earnings.
- Invested Capital
- Invested capital, calculated as the sum of total reported debt & leases and shareholders’ equity, rose from US$13,232 million in 2021 to US$18,075 million in 2022. This upward trend continued through 2023 (US$21,396 million) and 2024 (US$31,144 million), with the rate of increase accelerating. The most substantial growth occurred between 2024 and 2025, reaching US$47,433 million, and continued strongly into 2026, culminating in US$104,952 million. The increasing invested capital suggests a growing scale of operations and/or significant investment in growth initiatives.
The relative contribution of debt and equity to invested capital has shifted over time. While debt initially played a larger role in the early years, shareholders’ equity has become the dominant component, particularly in the later years of the observed period. This suggests a transition towards a more equity-financed capital structure.
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Cost of Capital
NVIDIA Corp., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 4,752,108) | 4,752,108) | ÷ | 4,762,552) | = | 1.00 | 1.00 | × | 27.44% | = | 27.38% | ||
| Total debt3 | 7,500) | 7,500) | ÷ | 4,762,552) | = | 0.00 | 0.00 | × | 2.92% × (1 – 21.00%) | = | 0.00% | ||
| Operating lease liability4 | 2,944) | 2,944) | ÷ | 4,762,552) | = | 0.00 | 0.00 | × | 4.38% × (1 – 21.00%) | = | 0.00% | ||
| Total: | 4,762,552) | 1.00 | 27.38% | ||||||||||
Based on: 10-K (reporting date: 2026-01-25).
1 US$ in millions
2 Equity. See details »
3 Total debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 3,203,232) | 3,203,232) | ÷ | 3,212,270) | = | 1.00 | 1.00 | × | 27.44% | = | 27.36% | ||
| Total debt3 | 7,231) | 7,231) | ÷ | 3,212,270) | = | 0.00 | 0.00 | × | 2.92% × (1 – 21.00%) | = | 0.01% | ||
| Operating lease liability4 | 1,807) | 1,807) | ÷ | 3,212,270) | = | 0.00 | 0.00 | × | 4.16% × (1 – 21.00%) | = | 0.00% | ||
| Total: | 3,212,270) | 1.00 | 27.37% | ||||||||||
Based on: 10-K (reporting date: 2025-01-26).
1 US$ in millions
2 Equity. See details »
3 Total debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 1,686,750) | 1,686,750) | ÷ | 1,696,692) | = | 0.99 | 0.99 | × | 27.44% | = | 27.28% | ||
| Total debt3 | 8,595) | 8,595) | ÷ | 1,696,692) | = | 0.01 | 0.01 | × | 2.63% × (1 – 21.00%) | = | 0.01% | ||
| Operating lease liability4 | 1,347) | 1,347) | ÷ | 1,696,692) | = | 0.00 | 0.00 | × | 3.76% × (1 – 21.00%) | = | 0.00% | ||
| Total: | 1,696,692) | 1.00 | 27.29% | ||||||||||
Based on: 10-K (reporting date: 2024-01-28).
1 US$ in millions
2 Equity. See details »
3 Total debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 575,263) | 575,263) | ÷ | 586,146) | = | 0.98 | 0.98 | × | 27.44% | = | 26.93% | ||
| Total debt3 | 9,805) | 9,805) | ÷ | 586,146) | = | 0.02 | 0.02 | × | 2.38% × (1 – 21.00%) | = | 0.03% | ||
| Operating lease liability4 | 1,078) | 1,078) | ÷ | 586,146) | = | 0.00 | 0.00 | × | 3.21% × (1 – 21.00%) | = | 0.00% | ||
| Total: | 586,146) | 1.00 | 26.96% | ||||||||||
Based on: 10-K (reporting date: 2023-01-29).
1 US$ in millions
2 Equity. See details »
3 Total debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 663,895) | 663,895) | ÷ | 676,001) | = | 0.98 | 0.98 | × | 27.44% | = | 26.95% | ||
| Total debt3 | 11,221) | 11,221) | ÷ | 676,001) | = | 0.02 | 0.02 | × | 2.38% × (1 – 21.00%) | = | 0.03% | ||
| Operating lease liability4 | 885) | 885) | ÷ | 676,001) | = | 0.00 | 0.00 | × | 2.51% × (1 – 21.00%) | = | 0.00% | ||
| Total: | 676,001) | 1.00 | 26.98% | ||||||||||
Based on: 10-K (reporting date: 2022-01-30).
1 US$ in millions
2 Equity. See details »
3 Total debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 340,256) | 340,256) | ÷ | 348,862) | = | 0.98 | 0.98 | × | 27.44% | = | 26.76% | ||
| Total debt3 | 7,851) | 7,851) | ÷ | 348,862) | = | 0.02 | 0.02 | × | 3.22% × (1 – 21.00%) | = | 0.06% | ||
| Operating lease liability4 | 755) | 755) | ÷ | 348,862) | = | 0.00 | 0.00 | × | 2.87% × (1 – 21.00%) | = | 0.00% | ||
| Total: | 348,862) | 1.00 | 26.82% | ||||||||||
Based on: 10-K (reporting date: 2021-01-31).
1 US$ in millions
2 Equity. See details »
3 Total debt. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
NVIDIA Corp., economic spread ratio calculation, comparison to benchmarks
| Jan 25, 2026 | Jan 26, 2025 | Jan 28, 2024 | Jan 29, 2023 | Jan 30, 2022 | Jan 31, 2021 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Economic profit1 | 90,669) | 55,725) | 19,320) | (3,435) | 4,725) | 876) | |
| Invested capital2 | 104,952) | 47,433) | 31,144) | 21,396) | 18,075) | 13,232) | |
| Performance Ratio | |||||||
| Economic spread ratio3 | 86.39% | 117.48% | 62.03% | -16.05% | 26.14% | 6.62% | |
| Benchmarks | |||||||
| Economic Spread Ratio, Competitors4 | |||||||
| Advanced Micro Devices Inc. | — | -21.11% | -27.37% | -28.80% | -28.42% | 28.16% | |
| Analog Devices Inc. | — | -12.03% | -14.15% | -10.06% | -11.43% | -14.67% | |
| Applied Materials Inc. | — | 17.27% | 10.37% | 13.36% | 23.33% | 18.82% | |
| Broadcom Inc. | — | -2.94% | -10.36% | 4.87% | 3.61% | -5.62% | |
| Intel Corp. | — | -18.62% | -29.96% | -19.83% | -13.05% | 3.54% | |
| KLA Corp. | 27.69% | 20.58% | 16.23% | 20.17% | 22.57% | 11.03% | |
| Lam Research Corp. | 11.97% | 12.15% | -2.98% | 2.38% | 17.40% | 12.74% | |
| Marvell Technology Inc. | -8.69% | -26.42% | -26.46% | -22.13% | -24.89% | -26.61% | |
| Micron Technology Inc. | — | -5.75% | -17.66% | -29.62% | -1.97% | -6.58% | |
| Qualcomm Inc. | — | 12.49% | 7.70% | 0.23% | 26.66% | 24.06% | |
| Texas Instruments Inc. | — | 2.39% | 2.70% | 12.32% | 32.90% | 31.54% | |
Based on: 10-K (reporting date: 2026-01-25), 10-K (reporting date: 2025-01-26), 10-K (reporting date: 2024-01-28), 10-K (reporting date: 2023-01-29), 10-K (reporting date: 2022-01-30), 10-K (reporting date: 2021-01-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2026 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 90,669 ÷ 104,952 = 86.39%
4 Click competitor name to see calculations.
The financial trajectory between January 2021 and January 2026 is characterized by an initial period of volatility followed by a phase of exponential growth in economic value creation. The data indicates a significant transition from modest value addition to a regime of hyper-efficiency, despite a notable contraction in the 2023 period.
- Economic Profit Trends
- Economic profit experienced a sharp oscillation, rising from 876 million USD in 2021 to 4,725 million USD in 2022, before collapsing to a deficit of 3,435 million USD in 2023. Following this trough, a rapid acceleration occurred, with profits surging to 19,320 million USD in 2024 and continuing an upward trajectory to reach 90,669 million USD by January 2026. This represents a substantial increase in the company's ability to generate returns above its cost of capital.
- Invested Capital Expansion
- Invested capital demonstrates a consistent and accelerating growth pattern. The capital base expanded from 13,232 million USD in 2021 to 47,433 million USD in 2025, followed by a dramatic increase to 104,952 million USD in 2026. The scale of investment more than doubled between 2024 and 2026, indicating aggressive resource deployment to support operational scaling.
- Economic Spread Ratio Analysis
- The economic spread ratio reflects high variability in capital efficiency. A positive spread of 6.62% in 2021 grew to 26.14% in 2022, but turned negative to -16.05% in 2023, signaling a period where the cost of capital exceeded the return on invested capital. A recovery followed in 2024 with a spread of 62.03%, peaking at 117.48% in 2025. By January 2026, the ratio moderated to 86.39%, suggesting that while economic profit continued to grow in absolute terms, the rate of return relative to the rapidly expanding capital base began to normalize.
The correlation between the surge in invested capital and the peak in the economic spread ratio suggests a period of exceptional operational leverage. The eventual decline in the spread ratio in 2026, coinciding with a massive spike in invested capital, indicates a potential shift toward a more capital-intensive phase of growth where the marginal return on new investment is lower than the peak efficiency observed in 2025.
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Economic Profit Margin
NVIDIA Corp., economic profit margin calculation, comparison to benchmarks
| Jan 25, 2026 | Jan 26, 2025 | Jan 28, 2024 | Jan 29, 2023 | Jan 30, 2022 | Jan 31, 2021 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Economic profit1 | 90,669) | 55,725) | 19,320) | (3,435) | 4,725) | 876) | |
| Revenue | 215,938) | 130,497) | 60,922) | 26,974) | 26,914) | 16,675) | |
| Add: Increase (decrease) in deferred revenue | 759) | 476) | 765) | 70) | 51) | 250) | |
| Adjusted revenue | 216,697) | 130,973) | 61,687) | 27,044) | 26,965) | 16,925) | |
| Performance Ratio | |||||||
| Economic profit margin2 | 41.84% | 42.55% | 31.32% | -12.70% | 17.52% | 5.17% | |
| Benchmarks | |||||||
| Economic Profit Margin, Competitors3 | |||||||
| Advanced Micro Devices Inc. | — | -37.61% | -61.81% | -73.50% | -70.47% | 10.61% | |
| Analog Devices Inc. | — | -45.93% | -65.34% | -36.13% | -42.83% | -94.24% | |
| Applied Materials Inc. | — | 12.25% | 7.22% | 8.96% | 13.47% | 12.01% | |
| Broadcom Inc. | — | -6.91% | -28.32% | 8.52% | 6.76% | -13.24% | |
| Intel Corp. | — | -41.07% | -52.08% | -33.68% | -18.36% | 3.97% | |
| KLA Corp. | 20.91% | 15.74% | 13.93% | 16.02% | 19.08% | 10.87% | |
| Lam Research Corp. | 9.32% | 10.15% | -3.02% | 2.09% | 12.85% | 10.28% | |
| Marvell Technology Inc. | -20.18% | -81.64% | -91.49% | -74.77% | -111.07% | -81.68% | |
| Micron Technology Inc. | — | -9.41% | -37.51% | -101.90% | -3.38% | -11.01% | |
| Qualcomm Inc. | — | 8.83% | 6.10% | 0.20% | 17.76% | 14.49% | |
| Texas Instruments Inc. | — | 3.86% | 4.52% | 15.89% | 28.85% | 28.21% | |
Based on: 10-K (reporting date: 2026-01-25), 10-K (reporting date: 2025-01-26), 10-K (reporting date: 2024-01-28), 10-K (reporting date: 2023-01-29), 10-K (reporting date: 2022-01-30), 10-K (reporting date: 2021-01-31).
1 Economic profit. See details »
2 2026 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenue
= 100 × 90,669 ÷ 216,697 = 41.84%
3 Click competitor name to see calculations.
The analysis of economic value creation reveals a period of extreme volatility followed by exponential growth in both absolute economic profit and the associated profit margin. While the period began with modest value creation, a significant contraction occurred in 2023 before a rapid escalation in profitability through 2026.
- Economic Profit Trends
- Economic profit experienced a non-linear trajectory, starting at 876 million USD in January 2021 and rising to 4.7 billion USD in 2022. A sharp reversal occurred in January 2023, where economic profit fell to negative 3.4 billion USD, indicating that the company's operating returns were insufficient to cover its cost of capital during that period. However, a recovery began in 2024, with profit surging to 19.3 billion USD and continuing an aggressive upward trend to reach 90.7 billion USD by January 2026.
- Adjusted Revenue Growth
- Adjusted revenue exhibited a consistent upward trend, transitioning from 16.9 billion USD in 2021 to 216.7 billion USD in 2026. The growth acceleration became particularly pronounced after January 2023, with revenue more than doubling between 2024 and 2025, and continuing to expand by approximately 65% into 2026.
- Economic Profit Margin Analysis
- The economic profit margin reflects the efficiency of value creation relative to revenue. The margin increased from 5.17% in 2021 to 17.52% in 2022, before dropping to -12.70% in 2023. A substantial recovery followed, with the margin climbing to 31.32% in 2024 and peaking at 42.55% in January 2025. By January 2026, the margin stabilized at 41.84%, suggesting that while absolute economic profit continues to grow, the rate of value creation relative to revenue has reached a plateau of high efficiency.
The correlation between the surge in adjusted revenue and the dramatic rise in economic profit margin after 2023 suggests a significant improvement in operational leverage and a substantial increase in returns above the cost of capital.
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