We came across a bullish thesis on NVIDIA Corporation (NVDA) on Substack by Kontra Investment Xchange. In this article, we will summarize the bulls’ thesis on NVDA. NVIDIA Corporation (NVDA)'s share was trading at $146.27 as of Nov 13^th. NVDA’s trailing and forward P/E were 68.57 and 37.45 respectively according to Yahoo Finance.

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NVIDIA continues to be a cornerstone in technology, especially as demand in AI and data centers escalates. Recently, the company has garnered significant attention, with analysts upgrading price targets to between $150 and $185, suggesting a market cap as high as $4.5 trillion. This optimism stems from NVIDIA's dominant position in AI and high-performance GPUs, particularly within its data center segment, which is anticipated to drive robust growth as hyperscale computing and sovereign AI initiatives expand globally. The introduction of cutting-edge GPUs, like the Hopper and Blackwell series, has positioned NVIDIA to capture substantial demand from both existing and emerging markets, such as the Middle East and Asia-Pacific regions, where government-driven AI projects are gaining momentum. Additionally, the strategic release of the Blackwell Ultra GPU and future platforms like Rubin with HBM4 technology underline NVIDIA’s commitment to advancing next-generation AI capabilities.

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NVIDIA’s revenue trajectory exemplifies this growth, with estimates projecting an increase from $26.9 billion in FY2022 to $129.3 billion by FY2025—a remarkable compound annual growth rate. The data center segment alone is expected to contribute significantly to this surge, reflecting NVIDIA’s robust product demand. Operationally, NVIDIA has also shown resilience amidst supply chain challenges, investing in CoWoS (chip-on-wafer-on-substrate) capacity to boost production by 30% year-over-year. This capacity expansion strengthens NVIDIA’s ability to meet market demand, cementing its competitive edge.

On the financial front, NVIDIA’s profitability has grown alongside revenue. Its EBIT margin is projected to expand to 66.6% by FY2025, while ROIC is set to exceed 400%, emphasizing the company's pricing power and efficient capital allocation. NVIDIA’s valuation, although steep at 50x forward earnings for FY2025, is justified given the EPS growth anticipated to rise from $2.95 in FY2025 to $6.17 in FY2026. Moreover, NVIDIA’s free cash flow is projected to yield 4.4% by FY2027, supported by strong operating cash flows and an expected net cash position surpassing $200 billion.