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 – 27.75% × 104,952 = 90,280
The financial trajectory over the observed six-year period is characterized by a transition from moderate volatility to exponential economic value creation. The most prominent feature of this period is the aggressive acceleration of profitability starting in 2024, which fundamentally shifted the company's capacity to generate returns above its cost of capital.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT demonstrated extreme growth, rising from 4,425 million in January 2021 to 119,408 million by January 2026. A notable contraction occurred in January 2023, where NOPAT fell to 2,334 million, representing a significant decline from the previous year's 9,602 million. However, this dip was followed by a massive surge, with profit levels increasing by more than ten-fold between 2023 and 2024, and continuing a steep upward climb through 2026.
- Capital Structure and Cost of Capital
- The cost of capital remained remarkably stable throughout the period, fluctuating within a narrow range between 27.19% and 27.75%. Concurrently, invested capital showed a consistent upward trend, growing from 13,232 million in 2021 to 104,952 million in 2026. The most significant expansion in invested capital occurred between January 2025 and January 2026, where the amount more than doubled, indicating a substantial increase in the resource base utilized to generate operating returns.
- Economic Profit Analysis
- Economic profit followed the volatility of NOPAT, recording a negative value of -3,513 million in January 2023. This indicates that during that specific period, the NOPAT was insufficient to cover the capital charge associated with the invested capital at the prevailing cost of capital. Following this trough, economic profit experienced an explosive recovery, reaching 19,205 million in 2024 and escalating to 90,280 million by January 2026. This progression confirms that the growth in operating profit far outpaced the growth in the cost of the capital employed, resulting in substantial value creation for the organization.
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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$104,952 million. The increasing invested capital suggests a growing scale of operations and/or significant investment in growth initiatives.
The relative contribution of debt and equity to invested capital has shifted over time. While debt initially played a larger role in the early years, shareholders’ equity has become the dominant component, particularly in the later years of the observed period. This suggests a transition towards a more equity-financed capital structure.
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Cost of Capital
NVIDIA Corp., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 4,752,108) | 4,752,108) | ÷ | 4,762,552) | = | 1.00 | 1.00 | × | 27.81% | = | 27.75% | ||
| Total debt3 | 7,500) | 7,500) | ÷ | 4,762,552) | = | 0.00 | 0.00 | × | 2.92% × (1 – 21.00%) | = | 0.00% | ||
| Operating lease liability4 | 2,944) | 2,944) | ÷ | 4,762,552) | = | 0.00 | 0.00 | × | 4.38% × (1 – 21.00%) | = | 0.00% | ||
| Total: | 4,762,552) | 1.00 | 27.75% | ||||||||||
Based on: 10-K (reporting date: 2026-01-25).
1 US$ 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 | × | 27.81% | = | 27.73% | ||
| 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 | 27.74% | ||||||||||
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 | × | 27.81% | = | 27.65% | ||
| 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 | 27.66% | ||||||||||
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 | × | 27.81% | = | 27.29% | ||
| 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 | 27.33% | ||||||||||
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 | × | 27.81% | = | 27.31% | ||
| 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 | 27.35% | ||||||||||
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 | × | 27.81% | = | 27.12% | ||
| 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 | 27.19% | ||||||||||
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 | 90,280) | 55,550) | 19,205) | (3,513) | 4,659) | 828) | |
| Invested capital2 | 104,952) | 47,433) | 31,144) | 21,396) | 18,075) | 13,232) | |
| Performance Ratio | |||||||
| Economic spread ratio3 | 86.02% | 117.11% | 61.66% | -16.42% | 25.78% | 6.26% | |
| Benchmarks | |||||||
| Economic Spread Ratio, Competitors4 | |||||||
| Advanced Micro Devices Inc. | — | -21.52% | -27.79% | -29.22% | -28.83% | 27.74% | |
| Analog Devices Inc. | — | -12.06% | -14.18% | -10.09% | -11.45% | -14.69% | |
| Applied Materials Inc. | — | 17.02% | 10.13% | 13.12% | 23.09% | 18.58% | |
| Broadcom Inc. | — | -3.00% | -10.42% | 4.81% | 3.56% | -5.68% | |
| Intel Corp. | — | -18.76% | -30.08% | -19.97% | -13.18% | 3.40% | |
| KLA Corp. | 27.53% | 20.42% | 16.08% | 20.01% | 22.42% | 10.88% | |
| Lam Research Corp. | 11.66% | 11.84% | -3.28% | 2.09% | 17.11% | 12.45% | |
| Marvell Technology Inc. | -8.94% | -26.67% | -26.71% | -22.37% | -25.14% | -26.87% | |
| Micron Technology Inc. | — | -5.88% | -17.78% | -29.73% | -2.10% | -6.71% | |
| Qualcomm Inc. | — | 12.40% | 7.60% | 0.13% | 26.57% | 23.96% | |
| Texas Instruments Inc. | — | 2.38% | 2.70% | 12.32% | 32.90% | 31.53% | |
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 × 90,280 ÷ 104,952 = 86.02%
4 Click competitor name to see calculations.
The analysis of economic value creation reveals a period of significant volatility followed by an exponential increase in both absolute economic profit and capital deployment. While the organization experienced a temporary contraction in economic value during the 2023 fiscal year, subsequent years show a rapid acceleration in the ability to generate returns above the cost of capital.
- Economic Profit Trends
- Economic profit exhibited a non-linear trajectory, starting at 828 million USD in 2021 and peaking at 90,280 million USD by 2026. A notable inversion occurred in 2023, where profit fell to negative 3,513 million USD, indicating that the return on invested capital failed to cover the cost of capital for that period. However, a recovery began in 2024, with profits surging to 19,205 million USD and continuing an aggressive upward trend through 2026.
- Invested Capital Expansion
- Invested capital demonstrated consistent growth throughout the observed period, scaling from 13,232 million USD in 2021 to 104,952 million USD in 2026. The growth was relatively steady between 2021 and 2025, but a substantial capital injection occurred between 2025 and 2026, where the capital base more than doubled from 47,433 million USD to 104,952 million USD.
- Economic Spread Ratio Dynamics
- The economic spread ratio, which measures the efficiency of invested capital in generating economic profit, mirrored the volatility of the profit figures. The ratio rose from 6.26% in 2021 to 25.78% in 2022, before dropping to -16.42% in 2023. A period of exceptional efficiency followed, with the ratio climbing to 61.66% in 2024 and reaching a peak of 117.11% in 2025. In 2026, the ratio moderated to 86.02%; this decline occurred despite the increase in absolute economic profit, reflecting the impact of the massive increase in the invested capital denominator.
Overall, the data indicates a transition from a moderate value-creation phase to a high-growth phase. The sharp increase in the economic spread ratio between 2023 and 2025 suggests a period of extreme operational leverage. The 2026 results indicate that while the scale of value creation continues to grow in absolute terms, the rate of return relative to the expanded capital base has begun to normalize.
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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 | 90,280) | 55,550) | 19,205) | (3,513) | 4,659) | 828) | |
| 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 | 41.66% | 42.41% | 31.13% | -12.99% | 17.28% | 4.89% | |
| Benchmarks | |||||||
| Economic Profit Margin, Competitors3 | |||||||
| Advanced Micro Devices Inc. | — | -38.35% | -62.75% | -74.56% | -71.49% | 10.46% | |
| Analog Devices Inc. | — | -46.03% | -65.46% | -36.23% | -42.92% | -94.41% | |
| Applied Materials Inc. | — | 12.08% | 7.05% | 8.79% | 13.33% | 11.85% | |
| Broadcom Inc. | — | -7.05% | -28.49% | 8.42% | 6.66% | -13.37% | |
| Intel Corp. | — | -41.39% | -52.27% | -33.91% | -18.54% | 3.81% | |
| KLA Corp. | 20.79% | 15.62% | 13.80% | 15.90% | 18.95% | 10.72% | |
| Lam Research Corp. | 9.07% | 9.90% | -3.33% | 1.83% | 12.63% | 10.04% | |
| Marvell Technology Inc. | -20.78% | -82.42% | -92.37% | -75.59% | -112.19% | -82.48% | |
| Micron Technology Inc. | — | -9.62% | -37.77% | -102.30% | -3.59% | -11.22% | |
| Qualcomm Inc. | — | 8.76% | 6.02% | 0.12% | 17.70% | 14.43% | |
| Texas Instruments Inc. | — | 3.86% | 4.51% | 15.88% | 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 × 90,280 ÷ 216,697 = 41.66%
3 Click competitor name to see calculations.
An analysis of the economic value added metrics reveals a trajectory characterized by an initial phase of volatility followed by a period of exponential growth in value creation.
- Economic Profit Margin Trends
- The economic profit margin exhibited significant fluctuation between 2021 and 2023. After increasing from 4.89% in January 2021 to 17.28% in January 2022, a sharp reversal occurred in January 2023, with the margin dropping to -12.99%. This decline indicates a period where the company's net operating profit was insufficient to cover its cost of capital. This trend reversed aggressively starting in January 2024, with the margin climbing to 31.13% and reaching a peak of 42.41% in January 2025.
- Revenue Scaling and Value Generation
- Adjusted revenue demonstrates a consistent upward trend, growing from 16.9 billion US dollars in January 2021 to a projected 216.7 billion US dollars by January 2026. Economic profit followed a similar expansive path after the 2023 contraction, rising from 19.2 billion US dollars in January 2024 to a projected 90.3 billion US dollars by January 2026. The simultaneous growth in both revenue and economic profit suggests that the increase in scale was accompanied by enhanced operational efficiency and superior value creation relative to the cost of invested capital.
- Margin Stabilization
- A period of stabilization is observed in the most recent projections. Between January 2025 and January 2026, the economic profit margin shifted from 42.41% to 41.66%. While this represents a slight percentage decrease, the absolute economic profit continued to increase substantially, indicating that the company has transitioned from a phase of rapid margin expansion to a phase of sustained, high-magnitude economic profitability.
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