Late last month, Nvidia (NVDA 6.18%) turned in a report for its second quarter of fiscal 2024 (which ended July 30) that was amazing. The tech giant's phenomenal revenue and earnings growth was driven by powerful demand for its offerings that enable artificial intelligence (AI) capabilities, particularly generative AI.
Quarterly earnings reports don't tell the entire story. There's usually valuable information that's shared on a company's quarterly earnings calls and even more useful data contained in its annual reports. Following are three metrics that caught my attention as I perused Nvidia's annual report for fiscal 2023, which ended on Jan. 29. This information is still relevant and should help investors make more informed investing decisions in the AI space.
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1,187
Nvidia's annual report mentions "AI" or "artificial intelligence" 1,187 times! Moreover, the report uses the term "generative AI" 35 times. Generative AI is the technology behind ChatGPT, the hugely popular chatbot that launched late last year.
By comparison, the 2022 annual report of Advanced Micro Devices (AMD) -- the second-largest producer of discrete graphics processing units (GPUs) behind Nvidia -- mentions "AI" or "artificial intelligence" 17 times and "generative AI" once.
Chipmaker Intel's 2022 annual report has 87 mentions of "AI" or "artificial intelligence" and not a single mention of "generative AI."
So what? This data seems a decent reflection of each company's current involvement in AI. Nvidia has great reasons to have numerous mentions of AI -- it's already a massive player in this space. Its GPU-based approach to deep learning, a form of AI, dominates the AI training market and is a leader in the AI inferencing market. AMD and Intel have chips used for AI processing -- with AMD planning to ramp production of its new powerful MI300 AI chip in the fourth quarter -- but neither is as big a player in this market as Nvidia.
In February when Nvidia released in fiscal 2023 report, many investors likely already knew the company was a dominant force in the AI tech realm. However, I'd venture to say that most investors didn't realize at that time just how humongous the demand for its tech to enable generative AI would be.
Yes, I am implying that some investors who read Nvidia's annual report in February could have gleaned that the company's financial results were soon likely to be turbocharged by demand for its products and services that enable generative AI. And had they decided at that time to buy Nvidia stock for the first time or add to their existing holdings, they would have made themselves a tidy sum of money, as Nvidia stock has more than tripled in 2023.
2012
Nvidia pinpoints 2012 as the year in which its GPUs, paired with its CUDA programming model, sparked what it calls "the big bang of modern AI."
For at least several years prior to 2012, AI researchers around the world had been using the parallel processing capabilities of Nvidia's GPUs for AI training. However, 2012 was the year that these capabilities became more well known thanks in large part to Nvidia Research teaming with Stanford's Andrew Ng, a global leader in AI, according to Nvidia.
So what? This date shows investors what a big head start Nvidia has on competitors and potential competitors, such as AMD and Intel, that are eager to take away some of its AI tech market share. Actually, it's head start is even longer, with 2006 probably being a better marker. That's the year Nvidia developed CUDA and without CUDA, Nvidia's GPUs would not possess the parallel processing capabilities needed to accelerate general computing or AI training and inferencing.
$299 million
Nvidia ended fiscal 2023 with $299 million in investments in non-affiliated entities. Of this total, $288 million and $11 million, respectively, were the values of its investments in privately held equity securities and publicly held stocks. The fair value of the privately held equities are the company's estimates.
So what? The fact that Nvidia has sizable investments in various primarily privately held tech companies -- some of them likely to eventually go public -- increases the attractiveness of investing in its stock. When investors buy Nvidia stock, they're also getting a stake in a mini tech mutual fund of sorts.
