NVIDIA Corp. (NASDAQ:NVDA)

The analysis of the financial performance over the six-year period reveals significant fluctuations and trends in profitability, capital efficiency, and economic value generation.

Net Operating Profit After Taxes (NOPAT)

NOPAT showed a general upward trend with some volatility. Starting at 2,792 million USD in early 2020, it increased substantially to 4,425 million USD in 2021 and then more than doubled to 9,602 million USD in 2022. However, there was a notable sharp decline in 2023 to 2,334 million USD, followed by a dramatic rebound to 27,819 million USD in early 2024 and a further surge to 68,707 million USD by early 2025. This indicates periods of fluctuating operational performance, possibly due to external market conditions or internal strategic changes, followed by exceptionally strong operational profitability in the most recent years.

Cost of Capital

The cost of capital remained relatively stable throughout the period, fluctuating narrowly between 21.68% and 22.11%. This stability suggests a consistent risk perception and financing environment for the company despite the volatility observed in profit figures.

Invested Capital

The invested capital steadily increased from 14,224 million USD in early 2020 to 47,433 million USD by early 2025. The growth was consistent, with some acceleration noted between 2023 and 2025. This expansion in invested capital indicates increased resource commitments, which may underpin the growth in operating profit seen in the later years.

Economic Profit

Economic profit displayed high variability and pronounced swings: it started negatively at -321 million USD in 2020, turned positive to 1,556 million USD in 2021, and rose significantly to 5,661 million USD in 2022. A steep decline occurred in 2023, resulting in a negative economic profit of -2,328 million USD, implying that the company did not cover its cost of capital that year despite positive NOPAT. This was followed by a remarkable recovery with economic profit jumping to 20,952 million USD in 2024 and reaching 58,219 million USD in 2025, reflecting highly value-creating operations exceeding the cost of capital by a wide margin.

Overall, the data suggest that the organization experienced some volatility in operational efficiency and value creation during the five-year span but demonstrated outstanding improvements in profitability and economic profit in the last two years, supported by substantial capital investment and a stable cost of capital environment.

The financial data reveals significant fluctuations and overall growth in key profitability metrics over the observed periods.

Net Income

The net income shows a general upward trend from January 26, 2020, to January 26, 2025, starting at $2,796 million and increasing markedly to $72,880 million. A notable surge occurs between January 29, 2023 ($4,368 million) and January 28, 2024 ($29,760 million), followed by a further sharp increase to $72,880 million in the subsequent period. Despite a dip after January 30, 2022 ($9,752 million) down to $4,368 million by January 29, 2023, the overall trajectory is strongly positive.

Net Operating Profit After Taxes (NOPAT)

NOPAT values follow a similar pattern to net income, starting at $2,792 million in January 26, 2020 and increasing substantially by January 26, 2025 to $68,707 million. This metric also exhibits a decline from $9,602 million in January 30, 2022 to $2,334 million in January 29, 2023, before recovering dramatically to $27,819 million in January 28, 2024 and continuing to grow significantly in the final period.

Overall, the data indicates periods of volatility around early 2023, with decreases in profitability metrics, followed by a strong recovery and exceptional growth leading into 2024 and 2025. This suggests that while the company experienced some operational and financial challenges in the mid-period, it managed to capitalize on conditions or strategic initiatives leading to a substantial increase in profitability towards the end of the analysis window.

Income tax expense (benefit)

Over the analyzed periods, the income tax expense exhibits a volatile trend. Initially, it decreased from 174 million US dollars in early 2020 to 77 million in early 2021, followed by an increase to 189 million in early 2022. The figure then shifted to a negative value (-187 million) in early 2023, indicating a tax benefit during that year. Subsequently, there was a sharp and substantial increase to 4,058 million in early 2024, which further escalated to 11,146 million in early 2025, reflecting significantly rising tax expenses in the most recent years.

Cash operating taxes

Cash operating taxes demonstrate a consistent and pronounced upward trend throughout the period. Starting at 134 million US dollars in early 2020, the cash taxes increased steadily each year, reaching 390 million in 2021, 643 million in 2022, and 1,983 million in 2023. The upward trajectory accelerates substantially in the final years analyzed, with cash operating taxes rising to 6,430 million in early 2024 and then more than doubling to 15,316 million by early 2025. This indicates a growing cash tax outflow from operations over the years under review.

Total Reported Debt & Leases

The total reported debt and leases demonstrated a marked increase from 2,643 million USD in early 2020 to a peak of 12,031 million USD by early 2023, reflecting a significant rise in financial obligations over this period. Subsequently, a downward trend is observed, with the amount decreasing to 11,056 million USD in early 2024 and further to 10,270 million USD by early 2025. Despite this recent reduction, the debt level remains substantially elevated compared to the 2020 baseline.

Shareholders’ Equity

Shareholders’ equity exhibited strong and consistent growth throughout the timeframe. Starting at 12,204 million USD in early 2020, it increased to 16,893 million USD by early 2021, followed by a substantial surge to 26,612 million USD in early 2022. While a slight decline occurred in early 2023, falling to 22,101 million USD, equity then rose sharply to 42,978 million USD in 2024 and reached an impressive 79,327 million USD by early 2025. This upward trajectory indicates a significant accumulation of net assets and possibly improved retained earnings or capital inflows.

Invested Capital

Invested capital showed fluctuation early in the period, declining from 14,224 million USD in early 2020 to 13,232 million USD in early 2021 before ascending steadily to 18,075 million USD in early 2022. This growth continued, reaching 21,396 million USD in early 2023, followed by a notable increase to 31,144 million USD in 2024. The trend culminated with a substantial rise to 47,433 million USD by early 2025. This progression implies increased investment in operational assets or expansion activities over time.

Summary

Overall, the data reveal a strategy characterized by elevated leveraging during the initial years, followed by gradual deleveraging beginning in 2023. Concurrently, both shareholders’ equity and invested capital have grown robustly, with equity growth outpacing that of debt, indicating strengthening financial stability and capital base. The significant rise in invested capital aligns with the reported equity increase, suggesting sustained investment in growth and asset development. These patterns collectively point to an expansion phase supported by increased capital investments alongside active management of debt levels.

The financial data reveals significant fluctuations and a general upward trend in the economic performance and capital investment over the observed periods.

Economic Profit

The economic profit started negatively at -321 million US dollars in early 2020, then turned positive and improved substantially to 1,556 million by early 2021. This positive momentum continued more strongly in 2022 reaching 5,661 million. However, a reversal occurred in early 2023 with a substantial negative economic profit of -2,328 million. After this decline, there was a marked recovery and exceptional growth, with economic profit soaring to 20,952 million by early 2024 and further increasing to 58,219 million in early 2025.

Invested Capital

The invested capital showed a generally increasing trend throughout the period. Beginning at 14,224 million US dollars in early 2020, it slightly decreased to 13,232 million by early 2021. From this point, capital continued to increase steadily, reaching 18,075 million in early 2022, 21,396 million in early 2023, 31,144 million in early 2024, and ultimately 47,433 million by early 2025. This indicates a continuous expansion in the resources allocated for business operations.

Economic Spread Ratio

This ratio, which reflects the return above the cost of capital, followed a pattern similar to economic profit. Initially negative at -2.25% in early 2020, it demonstrated improvement by rising to 11.76% in early 2021 and further to 31.32% in early 2022. A significant downturn occurred in early 2023, with the ratio falling to -10.88%, indicating losses relative to capital costs. This was followed by a strong rebound to 67.28% in early 2024 and a remarkable increase to 122.74% by early 2025, showcasing increasingly efficient capital utilization and profitability.

In summary, the period reflects volatility with sharp turns in profitability and returns around early 2023, but the latter years exhibit a strong upward trajectory in economic profit and capital efficiency, supported by expanding invested capital. This suggests an improving economic environment, possibly due to operational or market factors enhancing value generation significantly after the early 2023 downturn.

The financial data over the span of six years reveals significant fluctuations and overall growth in key metrics for the analyzed entity.

Adjusted Revenue

The adjusted revenue displays a strong upward trend. Starting from 10,981 million US dollars in early 2020, it increased steadily each year, reaching 16,925 million in 2021, then accelerating to 26,965 million in 2022. The growth moderated slightly in 2023 to 27,044 million but surged dramatically thereafter, reaching 61,687 million in 2024 and more than doubling to 130,973 million by 2025. This pattern indicates robust business expansion and increasing market penetration over the years.

Economic Profit

The economic profit exhibited considerable volatility. Initially, there was a negative value of -321 million US dollars in 2020, followed by a strong recovery to 1,556 million in 2021. The upward trend continued sharply to 5,661 million in 2022, but this was interrupted by a notable decline into negative territory again in 2023 with -2,328 million. The subsequent years show remarkable improvement, with economic profit soaring to 20,952 million in 2024 and further to 58,219 million in 2025. This volatility suggests periods of operational challenges or significant investments, followed by substantial profitability gains.

Economic Profit Margin

The economic profit margin parallels the trends seen in economic profit, indicating varying efficiency in converting revenue into economic profit. The margin started at a negative 2.92% in 2020, improved significantly to 9.19% in 2021, and rose further to 21% in 2022. However, the margin dipped again to -8.61% in 2023, reflecting the negative profit in that year. The margin then increased sharply to 33.97% in 2024 and reached 44.45% in 2025, highlighting a strong improvement in operational profitability and cost management relative to revenue towards the end of the period.

In summary, while there are notable fluctuations in economic profitability and margins, the overall trajectory indicates significant growth in revenue and eventual substantial improvements in economic profit and profitability margins. The interim declines suggest episodic challenges or strategic investments that impacted short-term economic performance but were followed by strong recoveries and enhanced financial outcomes.