NVIDIA Corp. (NASDAQ:NVDA)

The analysis of the financial data over the six-year period reveals several noteworthy trends regarding profitability, capital efficiency, and economic value creation.

Net Operating Profit After Taxes (NOPAT)

NOPAT displays a generally increasing trajectory, with a substantial rise from 2,792 million US$ in 2020 to 68,707 million US$ in 2025. An exception occurs in 2023 when NOPAT declines sharply to 2,334 million US$, down from 9,602 million US$ in 2022. However, the subsequent years show a strong recovery and exceptional growth.

Cost of Capital

The cost of capital remains relatively stable over the period, fluctuating narrowly between 21.37% and 21.79%. This consistency suggests that the company’s financing and risk profile, as reflected by the cost of capital, has not experienced significant volatility.

Invested Capital

Invested capital increases steadily from 14,224 million US$ in 2020 to 47,433 million US$ in 2025, indicating ongoing investments or asset accumulation. The most pronounced increase is observed between 2023 and 2025, corresponding with the period of recovery and growth in NOPAT.

Economic Profit

Economic profit exhibits considerable volatility, initially moving from a negative value of -276 million US$ in 2020 to a positive 5,718 million US$ in 2022. Thereafter, it turns negative again in 2023 (-2,261 million US$), mirroring the decline in NOPAT, before surging to 58,370 million US$ in 2025. This pattern underscores a period of fluctuating value creation, with the company achieving substantial economic profit in the later years.

In summary, the data indicate a company that expands its capital base steadily while experiencing fluctuations in profitability and value creation. Despite a dip in 2023, the overall trend is a strong improvement in operating results and economic profit, supported by a stable cost of capital. This suggests improving operational efficiency and a higher return on invested capital in the later years of the period analyzed.

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.

Economic Profit

The economic profit experienced significant fluctuations over the reported periods, starting from a negative value of -276 million US dollars in early 2020, then increasing sharply to 1,597 million in 2021. It continued to rise substantially to 5,718 million in 2022. However, there was a sharp decline to -2,261 million in 2023, followed by robust rebound and growth to 21,051 million in 2024 and further to 58,370 million in 2025. This pattern indicates volatility but overall a strong upward trajectory towards the later years.

Invested Capital

Invested capital shows a consistent rising trend throughout the period. Beginning at 14,224 million US dollars in 2020, it experienced a slight decrease to 13,232 million in 2021. After this minor dip, invested capital increased steadily each year, reaching 18,075 million in 2022, 21,396 million in 2023, 31,144 million in 2024, and finally 47,433 million in 2025. This continuous growth in invested capital suggests ongoing investment activities and expansion.

Economic Spread Ratio

The economic spread ratio mirrors the variability observed in economic profit. It started at a negative spread of -1.94% in 2020, rose significantly to 12.07% in 2021, and surged to 31.63% in 2022. There was a reversal to a negative spread of -10.57% in 2023, indicating a period of unfavorable returns relative to invested capital. Subsequently, the ratio sharply increased to 67.59% in 2024 and further to 123.06% in 2025, indicating improving profitability and returns on investments in the most recent years.

Adjusted Revenue

The adjusted revenue has exhibited a consistent and substantial upward trend over the analyzed periods. Starting from approximately 10,981 million US dollars in early 2020, it increased to nearly 17,000 million by early 2021. The growth accelerated further, reaching approximately 27,000 million in early 2022 and maintaining a similar level into early 2023. The revenue then sharply rose to over 61,000 million in early 2024 and nearly doubled again to approximately 131,000 million in early 2025. This indicates a strong expansion in sales or service income across the years.

Economic Profit

Economic profit fluctuated significantly throughout the periods. It started with a negative value of -276 million US dollars in 2020, indicating a loss relative to the cost of capital. In 2021, it rose considerably to a positive 1,597 million, continuing this upward trajectory to 5,718 million in 2022. However, a sharp reversal occurred in 2023, with economic profit declining to a negative figure of -2,261 million. Subsequently, there was a dramatic improvement to 21,051 million in 2024, further increasing to 58,370 million in 2025. These fluctuations suggest variable profitability relative to invested capital, with notable volatility in some years but a very positive trend in recent periods.

Economic Profit Margin

The economic profit margin experienced notable variation over time. Initially negative at -2.51% in 2020, it improved markedly to 9.44% in 2021 and further increased to 21.21% in 2022. A decline then followed in 2023, with the margin turning negative to -8.36%. Subsequently, the margin rose significantly to 34.13% in 2024 and 44.57% in 2025. This pattern implies that the company’s efficiency in generating economic profit relative to revenue has varied, at times dipping below zero, but showing strong recovery and substantial margin expansion in the latest years.

Overall Analysis

The financial data indicates strong growth in adjusted revenues, reflecting expanded business scale or pricing power. Although economic profit and its margin showed volatility, the general trajectory after 2023 is strongly positive, suggesting improved cost management, operational efficiency, or competitive advantage. The significant rebound in economic profit and margin in the last two years points to enhanced value creation exceeding capital costs at a higher scale of operations. The earlier volatility may warrant deeper investigation, but recent trends denote robust financial performance and profitability improvements.